· Sterling fell over half a percent against the dollar on Monday, slipping from five-month highs after the British parliament delayed a crucial vote on a Brexit withdrawal agreement.
In Asian trade, the pound fell 0.61% to $1.2910, having hit a five-month peak of $1.2990 on Friday and closing the week just below the $1.30 mark, a 6.5% surge since Johnson struck an EU divorce deal on Oct. 10.
The euro eased 0.13% to $1.1159 versus the greenback, off Friday’s two-month high of $1.1172.
The dollar was little changed at 108.48 to the safe-haven yen, still not far from its 2-1/2-month high of 108.94 yen marked on Thursday.
“Although many eyes are still on Brexit, there is not so much nervousness in the market as the risk of a no-deal Brexit has actually reduced over the weekend,” said Shinichiro Kadota, senior forex and rates strategist at Barclays in Tokyo.
“Apart from Brexit, traders are looking at central banks’ policy decisions.”
A big week for central banks kicks off on Thursday with the European Central Bank meeting, the last one for President Mario Draghi, while the main focus is on the U.S. Federal Reserve’s policy meeting on Oct. 29-30.
· Japan’s exports contracted for a 10th straight month in September, adding to speculation the central bank could ease monetary policy as soon as next week to support an economy hit by a slowdown in global demand.
Exports in September slumped 5.2% from a year earlier, Ministry of Finance data showed on Monday, dragged down by car and airplane parts to the United States and semiconductor production equipment to South Korea.
The fall was larger than a 4.0% drop expected by economists and marked the longest run of declines in exports since a 14-month stretch from October 2015 to November 2016.
· China’s economic growth could moderate further in 2020 — even though the global economy is likely to pick up pace, projected the International Monetary Fund.
The fund, in its World Economic Outlook report, said the Chinese economy could grow at 5.8% next year — slower than the 6.1% forecast for 2019. China grew 6.6% last year, according to the IMF.
“The Chinese economy is slowing down, which has continued an earlier trend of slowing down, which started a couple of years ago,” Tao Zhang, IMF’s deputy managing director, told CNBC’s Geoff Cutmore at the World Bank-IMF Annual Meetings in Washington on Saturday.
Still, Zhang said such growth rates are “reasonable” given that China is restructuring its economy to expand in a more sustainable way. That means relying less on debt to fuel growth, while focusing more on domestic consumption.
Such a transition would translate to slower but better quality growth in China, according to Zhang.
· China’s top central banker said on Saturday that potential escalation of trade tensions and policy uncertainty were the major risk factors facing the world economy, and market forces were keeping China’s yuan at an appropriate level.
Yi Gang, the governor of the People’s Bank of China, said in a statement to the International Monetary Fund’s steering committee that Beijing is “deeply disappointed” in the IMF’s failure to realign its shareholding structure to recognize the rising influence of China and other fast-growing economies.
· Britain could still leave the European Union within 10 days time, French Junior Economic Minister Agnes Pannier-Runacher said on Monday.
“One cannot rule out a Brexit within 10 days,” she told Sud-Radio. She said general progress had been made, but added that many small French companies still had to do more work to be ready in the case of a “no-deal” Brexit.
· Mario Draghi’s last meeting as European Central Bank chief this Thursday may prove a lively gathering given a deep rift among policymakers over renewed asset purchases that threatens the effectiveness of policy.
After unleashing a wave of stimulus measures in September — including an interest-rate cut and a decision to restart asset purchases to boost the economy — no major announcements are anticipated.
“The biggest part of the meeting will be the farewell to Draghi,” said Pictet Wealth Management strategist Frederik Ducrozet. “This could be an emotional moment for him.”
· The British government insisted on Sunday the country will leave the European Union on Oct. 31 despite a letter that Prime Minister Boris Johnson was forced by parliament to send to the bloc requesting a Brexit delay.
“We are going to leave by October 31. We have the means and the ability to do so,” Michael Gove, the minister in charge of no-deal Brexit preparations, told Sky News.
“That letter was sent because parliament required it to be sent ... but parliament can’t change the prime minister’s mind, parliament can’t change the government’s policy or determination.”
· British Prime Minister Boris Johnson will try to put his Brexit deal to a vote in parliament on Monday after he was forced by his opponents to send a letter seeking a delay from the European Union.
· Oil prices largely held steady on Monday, recouping some early losses as investors took stock of global economic pressures that could impact oil demand.
Global benchmark Brent crude oil futures LCOc1 were down 1 cent to $59.41 a barrel by 0648 GMT.
U.S. West Texas Intermediate crude oil futures CLc1 were off 2 cents at $53.76 a barrel.
“Weakness in oil price reflected a bearish view of the global energy demand, as the slowdown in manufacturing and trades seemed not to be ending anytime soon,” said Margaret Yang, market analyst at CMC Markets.
Reference: Reuters, CNBC
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