POLAND: Parliament Holds Closed-Door Meeting, NBP Eyes Period Of Wait-And-See

• RES 4: 1.4200 Round number resistance  
• RES 3: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
• RES 2: 1.4136 Bull channel top drawn from the Jul 23 low
• RES 1: 1.4120 Intraday high
• PRICE: 1.4109 @ 08:06 GMT Nov 5
• SUP 1: 1.3998 20-day EMA 
• SUP 2: 1.3935 50-day EMA 
• SUP 3: 1.3888 Low Oct 29 and a key support  
• SUP 4: 1.3859 Bull channel base drawn from the Jul 23 low

A bull cycle in USDCAD remains intact. This week’s extension highlights a clear reversal of the corrective bear leg between Oct 14 - 29. The pair has breached 1.4080, the Oct 16 high to confirm a resumption of the uptrend. Note too that moving average studies are in a bull-mode position, highlighting a dominant bull cycle. Sights are on 1.4136, the top of a bull channel drawn from the Jul 23 low. First support lies at 1.3998, the 20-day EMA.

• The Riksbank decision is due at 0830GMT/0930CET. The Board is almost certain to remain on hold at 1.75%, while reiterating that the policy rate “is expected to remain at this level for some time to come”.
• MNI’s full preview is here
• Since September, there have been several datapoints suggesting an economic recovery is underway, supported by accommodative monetary policy, an anticipated expansion of fiscal policy and declining trade policy uncertainty.
• However, we don't think these developments are enough to shift the Board from its clearly signalled path, particularly at an interim meeting with no updated MPR and rate path projection (only a concise Monetary Policy Update document will be presented).
• Soft signals from the Riksbank's Business Survey and a lack of improvement in hard labour market data should guard against the Board sending too hawkish a signal in November.
• The October services/composite PMI was released this morning. Although the services print was below the three-analyst strong consensus and last month’s reading (55.4 vs 57.1 cons, 57.9  prior), the composite PMI remains comfortably in expansionary territory (55.3 in October vs 52.7 YTD average). Note that it is still sending a slightly more optimistic signal than the Economic Tendency Indicator.
• Despite these solid aggregate PMI signals, we caveat that the employment indicators in both the manufacturing and services readings fell in October.  

Core global FI markets fade from Asia highs, as equity benchmarks move off lows.

• AI fears have dominated equity markets over the past ~36 hours.
• SONIA futures are effectively unchanged vs. yesterday’s settlement levels.
• October highs intact across the bulk of the strip (SFIZ5 broke its October high yesterday, but has pulled back).
• SFIZ5/Z6 & GBP 1y1y also remain off of their respective October lows.
• BoE-dated OIS is little changed to ~1bp more dovish vs. closing levels, pricing 7bp of easing for tomorrow, 17bp through December and 31bp through February.
• Final services PMI data is due today, but the bulk of the focus remains split between tomorrow’s BoE decision and local fiscal matters.
• On the former, we have characterised our view as 50/50 (when it comes to a cut or a hold), which is more dovish than current market pricing.
• We would have more confidence in a cut if the Budget was not coming into view, particularly given the soft food CPI reading in the latest monthly inflation release.
• Our full preview of the decision will be published later today.
• Note that The Times’ shadow MPC’s synthetic vote provided a 5-4 split to keep rates on hold.
• Elsewhere, the NIESR has suggested that the Budget should include GBP50bln of fiscal consolidation, with the aim of building fiscal headroom of ~1.5% of GDP.