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XE Currency Blog

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By xemarketanalysis October 9, 2019 11:49 am
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    XE Market Analysis: China Signals it May Be Open to a Partial Trade Deal with the US on Agriproducts

    OVERVIEW

    • Brexit continues to give currency investors the jitters.
    • China states it will be would be open to buying US agricultural products, giving new hope of more positive trends to come in US-China trade talks
    • The euro, yen and Canadian dollar are only making modest gains as the USD succumbs slightly to pressure.

    HIGHLIGHT

    Play. Rewind. Replay. Lather, Rinse, Repeat. Financial markets continue to sway to the same tune. Yet the DJ may have just picked a great song for currency investors to dance to, as China has signalled they would be open to a partial trade deal, even though some Chinese tech companies have been blacklisted. The Brexit impasse and fear of a global economic slowdown still need to be addressed, however.  

    US DOLLAR

    The US dollar is trading broadly weaker vis-à-vis its major peers this morning. The US has announced visa restraints just before a high-level meeting, adding pressure to raw nerves, with the fading likelihood of an agreement between Beijing and Washington in the near term. In the UK, the Brexit stalemate continues to inject bouts of volatility into the Sterling with the currency sliding to a four-week low yesterday. Investors remain nervous –are still deciphering the no-QE type announcement from Fed Chair Powell and waiting for the release of FOMC minutes from last month’s meeting. Powell said he is confident in the moves the Fed has been making. 

    BRITISH POUND

    The pound remains vulnerable to further downside movement if the EU and UK fail to agree on a makeshift plan before the end of the month. So far, both parties have been trading blame and talks on the new proposals seemed to have collapsed. On this trajectory, we are hurtling towards a no-deal exit, come October 31st. As we mentioned last time, Sterling trading will be choppy with wide swings expected between 1.21 and 1.24 range.

    EURO

    The Euro is trading with a slightly firmer tone this morning amidst general USD weakness. The EUR/USD, however, remains within recent consolidation range after bouncing from a 2 ½ year low. There was no major data release during the European session. Hence, we expect the Fed minutes to inject cautious trading opportunities later today.

    CANADIAN DOLLAR

    USD CAD continues to move without defined direction after breaching the 200-day moving average last week. There is an absence of momentum to fetch higher highs as investors prefer to adopt a Wait and See policy. The US Fed is releasing meeting minutes later today (2 PM ET). The market will also keep an eye on Powell’s speech at a Fed Listens event. We expect the Canadian dollar to be driven by broader market sentiment and further developments in trade talks between the US and China.

    AUSTRALIAN DOLLAR

    AUD USD is down slightly after the Westpac Consumer Confidence survey numbers were less than positive. Confidence slumped from -1.7 in September to -5.5 for October. The pair now sits at 0.673031.

    FEATURED CURRENCY

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