European stocks slipped back again yesterday, as did US stocks in the wake of a rather political speech by President Trump at the United Nations where he tore into China, Iran and the World Trade Organisation, while also saying that the future belongs, not to globalists, but to patriots.

The losses in the US gained further traction after Europe had closed on reports that House Speaker Nancy Pelosi was weighing the prospect of announcing impeachment proceedings against President Trump in respect of a phone call, he had with Ukraine President Zelensky. During the call it is being alleged the US President pressured the Ukrainian President to conduct a probe into the Ukrainian business dealings of Hunter Biden, the son of prospective Democratic Presidential candidate Joe Biden.

President Trump has denied this and pledged to release the full transcripts of the call later today, however that hasn’t been enough to stop Pelosi following through on the speculation, and announcing that she would go ahead and start an inquiry, after US markets had closed.

Nonetheless the allegations, along with a sharp dive in US consumer confidence for September has raised concerns that the US economy may well be about to catch a Q4 pre-Christmas chill, in the process causing the US dollar to fall back and US yields to slide towards their lowest levels in nearly two weeks.

As a result of the weak finish on Wall Street, today’s European market session is likely to open lower.

Yesterday’s surprise unanimous and unequivocal Supreme Court decision means that the UK Parliament will reconvene today, however it is not immediately clear what it means for the gridlocked Brexit process. If the last two years are anything to go by, we’ll probably see more of the same with MPs still split as to what the next steps are likely to be.

While the Supreme Court ruling may well have unlocked extra parliamentary time for MPs to debate Brexit, it is not immediately clear what it will be able to achieve. It is more likely that this time will be wasted with political chicanery instead of striving to break the impasse. We can expect politicians from all sides to be highly critical of the Prime Minister, as well as calling for him to resign, however these calls are likely to fall on deaf ears.

There will be calls for a no confidence vote to take place, but again here MPs talk a good game but seem rather reluctant to deliver, unless as they put it, the option of no deal is taken off the table.

The problem with this reasoning is that the only way no deal can be taken off the table is to utilise one of the following options, leave with a deal, leave without a deal, revoke, or ask the EU for an extension. The last option could be problematic, in that the EU could reject any request, or attach conditions to it, though given how awful some of the recent economic data from Europe has been, they would be foolish to do so.

There is also the problem of the current parliamentary arithmetic which is unlikely to change unless or until there is an election.

This means that for all the uproar around the proroguing of Parliament it is unlikely that MPs will be able to coalesce around anything coherent, begging the question as to why they bothered to come back at all.

It also helps explain the rather muted reaction of the pound to yesterday’s events, which while moving modestly higher, simply put us back to where we were before Parliament was suspended, with a minority government and a zombie parliament.

EURUSD – still trading below trend line resistance at 1.1070, from the June peaks at 1.1412, with further resistance at the 50-day MA just above. While below these levels the risk remains for a retest of the lows, and a move towards 1.0800.

GBPUSD – has found support above the 1.2380 level in the past few days, and this remains a key level after last week’s short term high at 1.2582. We also have further resistance at the 200-day MA at 1.2740. A move below last week’s low at 1.2380, has the potential to see a move towards larger support at the 1.2280 area.

EURGBP – found support at the 0.8785/95 level last week, which is the 61.8% retracement of the entire 0.8475/ 0.9325 up move. We could squeeze back to the 0.8900 area where we have resistance. A break below 0.8780 opens up 0.8720.

USDJPY – continues to slip lower, falling below the 107.20 level, after last week’s bearish daily reversal, and failure at 108.50. A move below the 107.00 level opens up the prospect of a move towards 106.00.

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