U.S. dollar highlights:
USD stable and within a tight range the past week due to positive trade news from China. Negotiations between the world’s two biggest economies continue while China’s economy experienced a slowdown for the seventh consecutive month. Optimism for Phase One of the trade agreement supporting USD. China’s concessions to increase penalties on companies are significant and the only remaining issue is removing tariffs. If President Trump levies more tariffs against China, USD will strengthen. Stocks and futures are lower while Wholesale trade data for September was 1.0% increase (higher than expected 0%). Meanwhile, Federal Reserve Chairman Jerome Powell reiterated his hawkish stance that current monetary policy was appropriate, and the Fed will act if needed. Markets will monitor the slow growth and whether the Fed will continue cutting interest rates in 2020. All eyes on Q3 GDP today (previously 2% in Q2).
Canadian dollar highlights:
CAD stronger due to higher oil prices and renewed hopes Phase one of the trade deal will be approved by Presidents Xi and Trump. CAD direction will be determined by USD demand while commodity prices are secondary. All eyes on Friday’s GDP Growth Rate for Q3 (previously 3.7% annualized in Q2) and Producer Prices for October (previously -1.3% decrease in September). Markets will monitor the affect of the CN rail strike on oil prices. Meanwhile, there is a 33% chance of an interest rate cut from the Bank of Canada in January 2020.
EUR remains defensive while German Consumer Confidence improved to 9.7 (versus 9.6 expected). The Eurozone economy is slowing, and the outlook is negative. The central bank is under pressure to continue their accommodative monetary policy (including quantitative easing and cutting interest rates further). All eyes on November Consumer Prices reports for Germany and the European Union available Friday.
British pound highlights:
GBP stable with the Conservatives still leading polls before next month’s election. Markets are anticipating GBP stronger following the election (if Tories win a majority) and Prime Minister Boris Johnson’s Brexit bill passed. The Brexit deadline is January 31, 2010 and the European Union is firm there will be no more extensions. GBP direction will continue to be affected by daily poll results.