UK Service PMI stagnates just above 50
US Trade Balance in August narrows - but less than expected
BoC leaves rates unchanged. No mention on future rate moves
PM Johnson looses majority increasing chances of snap election
PM Conte to be sworn in tomorrow at 9 am (SMT)
US Issues New Iran Sanctions to cut oil export to zero
A relatively eventful day today with a couple of interesting moves in the energy and FX space. Looking at politics, UK PM lost support of the majority after Conservative MPs Phillip Lee defected to Lib Dems forming a new cross-party majority that could allow rebels to block no-deal. However, the PM has already threatened to call for new election as early as the 14th October should the Parliament mistrust the Government. The future on Brexit remains uncertain but let's try to make some clarity. Before the extension bill becomes law, the Government can force a new election, but needs the backing of two thirds of MPs. In this context Labour has already pledge it won't back the early election motion. However, two thirds of 639 votes (Speaker, Sinn Fein and three deputies excluded) is 426 votes and that would require the backing of Labour. Therefore, today the relief rally on GBP explained as UK Commons assume more control. However, the extension bill to become law requires the approval of the Lords and in the end of Europe (should it be passed by the Lords).
Should the Lords reject the rebels bills, then mostly likely a confidence vote will be tabled and see either the raise of Corbyn as new PM or snap election, leaving no-deal Brexit the legal default option. You choose which scenario looks more scary.
Looking elsewhere, today Crude Oil bounced back above $56 after the US announced new sanction on Iran as part of Trump Administration to cur Iranian Export to zero. "The news comes also in the context of upcoming Iran-set deadline for the nuclear deal on Thursday. This non compliance form the US likely sets the path for Iran to start its third reduction in commitments, which has ensured will be more pronounced than the prior two" (via RanSquawk). Moreover, the move comes as headwinds from Russian Oil Minister Novak stating that this month oil production has been less than previously planned. _______________ EU Close
If you missed the morning briefing from the desk click HERE