European FX Outlook: UK inflation hearing to echo Brexit uncertainty

What you need to know before markets open:

• German coalition talks tumbled over the weekend with political elite seeking ways to reopen discussions while Merkel prefers new elections.
• Fed’s chair Janet Yellen quits as a Fed governor promises a smooth transition to Jerome Powell.

Tuesday’s market moving events

• The RBA minutes revealed “considerable uncertainty” on how quickly wages might pick up and add to inflation. The RBA expected GDP growth of around 3% over next few years, but subdued productivity.
• The RBA Governor Philip Lowe is due to speak about recent developments in the Australian and global economy at the Australian Business Economists Annual Dinner, in Sydney at 09:05 GMT.
• Central and Eastern European central bankers participate in a conference in Vienna, Austria.
• The UK public sector net borrowing is expected to reach a surplus of GBP 6.6 billion in October.
• The Bank of England Governor and several MPC members testify on inflation and the economic outlook before Parliament's Treasury Committee in London at 10:00 GMT.
• UK Prime Minister Theresa May is meeting senior ministers to discuss Brexit bill offer.
• Canada’s wholesale prices are expected to rise 0.6% m/m in September.
• The US existing home sales are expected to rise 0.7% m/m in October to 5.43 million.
• ECB Executive Board member Benoit Cœuré is chairing Policy Panel “Economic convergence: before or beyond fiscal union” at ECB Conference “Public debt, fiscal policy and EMU deepening” in Frankfurt, at 15:00 GMT.
• The Fed chair Janet Yellen is due to due to participate in a panel discussion titled "In Conversation with Mervyn King" at the New York University Stern School of Business at 23:00 GMT.

Major forex market movers

• The GBP/USD currency pair is approaching the key resistance line in a triangle breakout higher, watch Inflation report hearing and the Brexit bill news for impulses.
• EUR/USD settled lower after a roller-coaster ride after German coalition collapse, economic prospects are increasingly bright before Wednesday’s activity data.  

Monday’s macro summary

• German coalition talks collapsed with FPD walking away from the possibility of forming the government.
• German PPI rose 2.7% y/y in October, down from September's 3.1% y/y.
• German Bundesbank's monthly bulletin sees a current economic upswing to maintain the brisk pace of growth seen in the first six months of the year.
• ECB President Mario Draghi opened his testimony at the European Parliament by saying “The economic expansion remains solid and broad-based across countries and sectors in the euro area, mainly supported by domestic demand.” As for the inflation pressures, Draghi said that those are still subdued as labor market slack remains significant and the ECB measures will preserve current financing conditions and ensure the ample degree of monetary stimulus that is still necessary.
• German President Steinmeier will urge all political parties to return to the negotiating table and avoid a new election, calling the stalemate unprecedented in recent history.
• Slovenian ECB Governing Council member Bostjan Jazbec said there is an urgent need to clean up NPLs in the banking system.
• Merkel says she is ready for a new election after coalition talks collapse.
• The Conference Board Leading Economic Index for the US increased 1.2% in October.
• ECB's Draghi said that there is no risk for central banks from digital currencies currently, but they are a development that should receive interest from central banks and supervisor. 
• Fed chair Yellen announces she will also leave the board of governors seat when successor Powell is sworn in.
• The US President Trump declares North Korea state sponsor of terrorism and triggers sanctions.