FRANCE: Voting Underway In First Censure Motion Against Second Lecornu Gov't
Oct-16 09:23
Voting is underway in the National Assembly in the first censure motion to be brought against the second gov't of PM Sebastien Lecornu. This motion has been put forward by the far-left La France Insoumise (LFI), with the ballot set to close at 11:30CET (05:30ET, 10:30BST) and results announced shortly afterwards. Following Lecornu's general policy speech on 14 Oct, in which he announced the suspension of the 2023 pension reforms and again renounced the use of Art. 49.3 of the Constitution to push through a budget without a parliamentary vote, the leadership of the centre-left Socialist Party (PS) said that it would not instruct its lawmakers to back a censure motion against Lecornu.
- Without PS backing, any censure motion is overwhelmingly likely to fall short of the 289 votes required to oust the gov't. While the conservative Les Republicains (LR) have voiced their frustration with the concessions made to the PS, it appears the party's lawmakers will not vote against the Lecornu gov't. Indeed, right-wing UDR group leader Eric Ciotti noted "almost completely empty benches" on the LR side of the National Assembly, indicating many of its lawmakers will not vote in favour of censure (in censure motions, only those in favour of removing the gov't cast ballots).
- Even with the parliamentary leaders of PS, LR and the LIOT group claiming their lawmakers will not vote for Lecornu's removal, there are likely to be rebels. BFM TV estimates that between 273 and 282 lawmakers could vote in favour of censure, an uncomfortably close margin for Lecornu.
- A second censure motion, put forward by the far-right Rassemblement National will be voted on after the first.
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EUR: Taking another broader leg higher
Sep-16 09:18
- The EUR takes another leg higher, a new intraday high against the USD, GBP, AUD, CAD, TRY, and CNH.
- Some of the early moves have been a function of the Dollar Weakness, but the bounce off the lows in Equities, as Bank Stocks recover from their earlier lows is underpinning the EUR.
- The next big level in the EURUSD comes at 1.1829 High Jul 01 and the bull trigger, which was also its highest level since September 2021.
- Note that this Week sees some notable Option expiries in EURUSD at 1.1800 Today, Thursday and Friday.
FOREX: US Dollar Extending Lower, EUR & JPY Lead Gains
Sep-16 09:12
- Following a similar theme to Monday’s session, the USD index is down 0.2% today, extending its grind lower to reach the lowest levels since early July. The index is now within 1% of the multi-year lows as we approach tomorrow’s Fed decision, which reside at 96.38. Continued strong performance for major equity indices and the more activist approach to Fed personnel management from the White House are providing greenback headwinds.
- In slight contrast today, it’s the majors which are outperforming, led by the likes of EUR and JPY. This has prompted a EURUSD (+0.40%) print above 1.18, as the pair narrows the gap to the cycle highs and key resistance at 1.1829. Clearance of this hurdle would confirm a resumption of the primary uptrend and immediately target the Sep 10 2021 high at 1.1851.
- Unsurprisingly, action has been centred around the Japanese yen, with USDJPY trading a 146.70-147.54 range already on Tuesday. The Yen was supported overnight by agricultural minister Koizumi’s intention to run for LDP leader. Finance Minister Kato is set to run his election campaign, providing a more hawkish (with respect to both fiscal and monetary policy) option compared to opinion poll leader Takaichi. USDJPY has subsequently settled back at 147.00 and key short-term support to watch remains at 146.21, the Aug 14 low and a bear trigger.
- In line labour market data from the UK has allowed GBP to continue its ascent against the dollar this morning, following yesterday’s breach of key resistance at 1.3595. The break strengthens bullish conditions and opens 1.3681, the July 4 high.
- It’s worth highlighting that AUDNZD briefly broke to the highest level since 2022 at 1.1191, however, momentum quickly stalled with the cross reversing back to 1.1160. New Zealand GDP is due Thursday local time, shortly before Australian employment data for August.
- Today’s focus will be on US retail sales and Canada CPI data, with US import prices and industrial production also scheduled.
GILT AUCTION RESULTS: Soft short 15-year auction; gilt futures minor move lower
Sep-16 09:10
- That is a relatively soft auction of the 4.375% Jan-40 gilt with a 0.9bp tail seeing the LAP (lowest accepted price) come in at 93.090 - below the pre-auction mid-price of 93.144 (a price that was exagerated a little itself by a move higher into the end of the bidding window. Prior to that the prevailing level had been around 93.116.
- Either way this short 15-year auction will be seen as slightly disappointing and the price fell immediately after to 93.051 (before moving back to broadly in line with the auction LAP at writing).
- Gilt futures saw some volatility around the results publication falling from 91.54 to 91.46 but are now trading around 91.52 - only minorly below pre-auction levels.
