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Here is what you need to know on Wednesday, October 16:

  • Brexit negotiations:  The UK and the EU seem close to a deal that includes an open border on the island of Ireland and a customs border in the Irish Sea. Some dub the accord as “Theresa May’s deal with lipstick” – implying significant concessions from UK Prime Minister Boris Johnson. The Northern Irish Democratic Unionist Party (DUP(has concerns while hardline Brexiteers seem to be on board. Talks in Brussels continue with Chief EU Negotiator Michel Barnier to brief diplomats on progress around 12:00 GMT. Late in the day, the PM will brief his Conservative Party. The aim is to declare a deal in the EU Summit on Thursday. GBP/USD has dropped from the highs near 1.28. More:  Brexit: Five outcomes and GBP/USD reactions as a deal may become real
  • Hopes for an accord have impacted the market sentiment beyond the pound and the UK. The yen reached multi-month lows, EUR/USD advanced, and gold came under pressure.
  • Trade: China has demanded that the US remove US tariffs and say that otherwise, it cannot reach the target of buying $50 billion worth of agricultural goods. Moreover, the world’s second-largest economy is unhappy with the intention of American lawmakers to support protesters in Hong Kong. USD/JPY that was carried higher amid Brexit hopes has retreated.  
  • US Retail Sales for September stand out on the economic calendar. Moderate increases in all measures are expected, confirming the strength of the American consumer. See  US Retail Sales Preview: Stronger consumer sentiment may tilt consumption higher
  • UK Consumer Price Index is set to rise, final euro-zone CPI to be confirmed at low levels, and Canadian inflation to drop on a monthly level. Mark Carney, Governor of the Bank of England, will participate at a panel discussion and will likely refrain talking about Brexit. Jens Weidmann, President of the German Bundesbank, may continue criticizing the decision to restart the European Central Bank’s bond-buying scheme.  
  • The Federal Reserve publishes its Beige Book later today. Alongside speeches from several Fed officials, markets will try to gauge if the bank will cut rates later this month.
  • Cryptocurrencies have been consolidating losses suffered on Tuesday.