EU FINANCIALS: Eurobank: S&P CW Pos

• EUR/USD: Nov05 $1.1600-20(E1.4bln); Nov06 $1.1400(E1.4bln), $1.1500(E1.5bln), $1.1550(E1.2bln), $1.1600(E1.4bln), $1.1715(E1.5bln)
• USD/JPY: Nov06 Y152.00($1.0bln), Y153.00-05($1.1bln), Y154.00-05($1.1bln), Y154.50-55($1.1bln), Y155.00($1.7bln), Y155.35($1.2bln)
• NZD/USD: Nov05 $0.5650(N$1.1bln), $0.5675(N$1.0bln)
• USD/CAD: Nov07 C$1.3900($2.3bln)

While market and political focus is on Finance Minister Francois-Philippe Champagne's annual federal budget, to be delivered on the afternoon of 4 November, there has been some speculation regarding the prospect of a snap election before year-end. While PM Mark Carney and his centre-left Liberals came away with an increased seat total in the 28 April federal election, their 169 members still sit short of the 172-seat majority threshold. 

• This means to pass the budget, viewed as likely to be more expansionary than last year's (see CAD: USDCAD on Course to Top Resistance; Budget Next Focus), the Liberals will need the support of one of the smaller parties, given the centre-right Conservative Party of Canada's opposition. If the left-wing New Democratic Party and regionalist Bloc Québécois join the Conservatives in voting the budget down, it would be viewed as a vote of no confidence in the Carney gov't.
• As Politico notes, there is little public enthusiasm for a second federal election within a year, and much of the situation can likely be put down to brinksmanship. Politico: "Liberals accuse Conservatives of girding for a Christmas election that would allow [CPC leader Pierre] Poilievre to get out ahead of a January leadership review. Conservatives insist it's Liberals who will trigger a vote by unveiling an unsupportable budget."
• Opinion polling in recent months has shown the LPC retaining a small but shrinking lead over the CPC. In July, the LPC's average lead over the CPC stood at 8.6%. By October, this had fallen to 2.5%, within the polling margin of error, essentially indicating a dead heat.  

Chart 1. 28 April Federal Election Result & Federal Election Opinion Polling, Monthly Average %

Source: Abacus Data, Ekos, Nanos Research, Pallas, Leger, Research Co., Angus Reid, Mainstreet Research, Liaison Strategy, MNI

• RES 4: 114-02   High Oct 17 and the bull trigger 
• RES 3: 113-29   High Oct 22
• RES 2: 113-18+ High Oct 28 
• RES 1: 113-06   20-day EMA 
• PRICE:‌‌ 112-20 @ 16:46 GMT Nov 3 
• SUP 1: 112-16   Low Oct 30 
• SUP 2: 112-14   Low Oct 9
• SUP 3: 112-06   Low Sep 25 and a reversal trigger
• SUP 4: 111-30   Trendline support drawn from the May 22 low 

Recent weakness in Treasuries undermines a bullish theme. The contract has traded through the 50-day EMA, at 112-26+, highlighting potential for a deeper retracement near-term. A continuation lower would open 112-06, the  Sep 25 low and the next key support. On the upside, the contract needs to trade above 113-18+, the Oct 28 high to signal a possible bullish reversal. Key resistance and the bull trigger is at 114-02, the Oct 17 high.