U.S. dollar highlights:
USD stable after Fed Chairman Powell spoke again yesterday for his second round of testimony to the House Budget Committee. Powell said that the current monetary policy will be “appropriate” if the economy continues to progress. The October budget statement confirmed a deficit of $134.5 billion USD (wider than expected). Meanwhile, President Trump said trade talks were progressing; however, China refused to commit to specific farm purchases. Although China also removed the ban on U.S. poultry meat imports, markets interpret this as trade discussions are not going well and causing risk aversion. Producer Prices for October increased 0.4% monthly and 1.1% yearly (both higher than expected) and Initial Jobless Claims for last week was 225K (previously 211K). Markets will now pay attention to President Trump’s impeachment hearings and how this affects stocks.
Canadian dollar highlights:
CAD weaker due to lower oil prices after U.S. inventories increased more than expected (to 12.8 million barrels per day). Due to weaker risk appetite, demand for oil is less and prices are lower. Meanwhile, OPEC expects a surplus in 2020 (due to slow global economic growth). Trade developments, geopolitical events and central bank policy will be the main factors for CAD direction. Governor Poloz spoke last night in San Francisco on how digital technologies affect central banking. CAD will remain under pressure unless trade developments improve.
EUR stable after Germany avoided a technical recession in Q3 as the economy expanded 0.1% (versus 0.1% contraction expected). Markets expect Q4 to also improve as factory orders are increasing. EUR remains vulnerable to trade developments and central bank policy. The European Central Bank said they exhausted all options and may provide more stimulus if necessary. Eurozone Consumer Prices for October available today (expecting 0.2% monthly and 0.7% year over year).
British pound highlights:
GBP defensive due to Brexit and election uncertainty. Retail Sales for October dropped 0.1% monthly (versus 0.2% increase expected) and 3.1% year over year (lower than expected 3.7%). There are four weeks until the December 12 election and there is increased hope for a Brexit deal (supporting GBP) as markets are confident Prime Minister Boris Johnson will receive enough votes to form a majority government.