UK Prime Minister Boris Johnson’s plan to renege on part of the Brexit divorce deal passed its first hurdle in Parliament yesterday after a fiery debate in which senior members of his own Conservative party and former Prime Ministers denounced the move. The House of Commons passed the Internal Market Bill in its first vote by a comfortable 77 votes, allowing it to go through to the next stage in the parliamentary process. The prime minister said the proposed legislation, which will rewrite part of the withdrawal agreement, is “essential” to maintain the UK’s economic and political integrity. Since Johnson's decision to revisit the agreement, the European Union has threatened legal action and called on him to withdraw the bill by the end of the month which Westminster has refused.
The dollar dipped as hopes for a COVID-19 vaccine and big corporate deals improved investor appetite for riskier currencies. The euro inched up 0.2% to $1.1885, extending its rise into a fifth straight day, with an initial resistance seen at around last week's high of $1.1917. The dollar traded at 105.73 yen, near its two-week low of 105.55 yen touched yesterday. The Swiss franc climbed further against the greenback on course to a sixth consecutive session of gains.
The Australian dollar was bolstered by policy minutes from the country’s central bank which stopped short of signalling a further cut to the cash rate. The Australian dollar gained 0.4% to $0.7312 as highly anticipated minutes from the central bank's September monetary policy meeting gave no hint that record low interest rates will be cut further. On more positive news, Australia registered yesterday its first day in months without Covid-19 deaths.
This week’s Federal Reserve meeting will be its first since Chairman Jerome Powell unveiled a shift toward greater tolerance of inflation, effectively pledging to keep interest rates low for longer. Projections from Fed policymakers that inflation will remain below 2% in their economic forecasts, to be extended to 2023 this time, could strengthen expectations that interest rates will stay low for a long period of time.