Euro zone bond yields rise ahead of crunch Brexit vote

Sunday, 20 Oct, 2019

On Thursday, the Pound jumped against the Canadian Dollar after Prime Minister Boris Johnson secured a "great new deal" with the EU.

Northern Ireland's Democratic Unionist Party announced Thursday it can not support Boris Johnson's Brexit plan due to concerns over "customs" and "VAT" issues, in a major blow to British Prime Minister Boris Johnson just hours before he is due to appear in Brussels for last-ditch talks on a Brexit agreement.

"Reportedly, about 20 Labour MPs are considering backing the deal, fearing that otherwise they will lose their seats in a pre-Brexit general election".

Sterling soared Thursday to within a whisker of US$1.30, striking five-month peaks after the European Union reached a draft Brexit withdrawal deal with London.

-China trade front, the euro was getting a boost.

In another sign the trade dispute is dragging on economic growth, data from China showed its third-quarter economic growth slowed to its weakest pace in nearly three decades.

Sterling GBP= was volatile as negotiators worked to clinch a last-minute Brexit deal before an European Union summit on Thursday. Yet, most of sterling's gains evaporated in the next hours, as doubts began to surface over whether the accord can get through Parliament. And in the short-term at least, Sterling's upward move is being underwritten by a Saturday vote that will either see parliament back Johnson's proposal or force him into requesting a third Brexit delay.

The DUP-key group of Northern Eire politicians-has mentioned it doesn't assist the deal, which has held again the pound's rally, because it retreated to $1.2772.

MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.24% while the FTSEurofirst 300 index .FTEU3 of leading European shares closed down 0.38%.

Looking to the week ahead, we may see the US Dollar recoup some ground this morning as disappointing Chinese trade data weakened market risk appetite.

Wall Street stocks dipped in early trading as solid earnings from Coca-Cola and American Express were offset by a weak Chinese economic report and uncertainty over Brexit.

Given U.S. consumption has been one of few remaining bright spots in the global economy, the data fanned worries the Sino-U.S. trade war would tip the world into recession.

Earnings season is dictating USA market moves, which has historically been the case, said Kristina Hooper, chief global market strategist at Invesco. "There isn't a deadline, we want to get a deal done, so we're not going to set ourselves an artificial deadline, we're not going to compromise the negotiation", he said.

Euro zone bond yields were also nudging up with German Bund yields holding at -0.40 per cent, the highest since early August.

The euro meanwhile continued to creep upwards, making a 7-week high of $1.1145.

US West Texas Intermediate (WTI) crude futures edged up by 35 cents to $54.28.

"Gold will be range-bound until and unless we have some clarity on Brexit and other geo-political risks", Lan said adding that he expects gold to trade around $1,475 and $1,503 per ounce in the short term. COMEX gold finished the week with 0.1 percent gains and MCX gold gained by 0.6 percent even though the dollar fell by almost one percent as the International Monetary Fund revised down its USA growth forecast to 2.1 percent from 2.3 percent for 2020.