U.S. dollar highlights:
USD firm as markets wait for the next developments on Brexit and trade negotiations with China. The current mood is risk-off as President Trump and Xi may sign an agreement next month in Chile. China promised to stabilize trade through imports, keep the yuan currency stable and support foreign investment. Meanwhile, crude oil stocks decreased 1.699 million barrels last week (after increasing 9.281 million previously and lower than expected 2.232 million). The average house price Index increased 0.2% in August (lower than expected 0.3% gain and previously 0.4% in July). New home sales expecting 0.697 million/-2.2% monthly in September today. The Federal Reserve will announce their interest rate decision next week Wednesday and markets are expecting another cut to boost the economy and inflation (25 bps cut is already priced in).
Canadian dollar highlights:
CAD stable on firm oil prices and positive trade developments between U.S. and China. Wholesale trade decreased 1.2% in August (lower than expected 0.4% increase). Markets will focus on the Bank of Canada’s interest rate decision and press conference next Wednesday and August GDP (available next Thursday). The central bank is expected to remain stable after employment, consumer prices, retail sales and the business outlook survey all support CAD.
EUR lower and defensive as markets focus today on the central bank and PMI for France, Germany and the Eurozone. Uncertainty over Brexit and trade relations between U.S. and China are affecting the German manufacturing sector. The European Council is also considering an extension of Article 50 to allow the U.K. more time to finalize a withdrawal agreement. President Mario Draghi’s last press conference is today.
British pound highlights:
GBP weaker after parliament rejected Prime Minister Boris Johnson’s timetable for his Brexit bill on Tuesday. Markets are now waiting for how long the European Union will extend the deadline (from October 31). A short extension until the end of November or a longer extension (until January 31, 2020 is likely); however, chances have increased there will be another election before 2020. Fears of a no-deal Brexit have decreased, but GBP is vulnerable due to Brexit volatility.