Thursday September 26th, 2019

US$ continued its rally vs major currencies on safe-haven buying amid US lawmakers impeachment probe. On the trade front, U.S/Japan signed a limited trade deal, but left autos for future talks. The U.S President also commented that « a trade deal with China could happen sooner than people think ». Today the focus will be on U.S. lawmakers as they speak with the U.S. President regarding the whistleblower report. Also in focus will be the release of US GDP data & ECB president Draghi speech.

Oil prices weakened after U.S. crude stockpiles unexpectedly rose and as Saudi Arabia resumed its oil production quicker than expected. The Canadian dollar has remained relatively stable vs its peers during the impeachment announcement and alongside falling oil prices. Renewed trade optimism helped the currency retain investor interest,  but comments by U.S. President saying that the impeachment inquiry could derail USMCA trade deal could be reason for concern.

EUR continues to sell off sitting close to its 2019 lows, as a list of concerns in Europe including the German weak economy continue & political uncertainties remain. Investors fear continue to grow that Germany will slip into a technical recession in Q3. US tariffs on imports of EU cars & possible Airbus related tariffs and Brexit add to EUR weakness.

UK parliament has reconvened to a rowdy session. Focus shifts to possible elections, a motion of no confidence and a Brexit extension are all on the cards. GBP fell more than 1% versus the dollar as the potential of more months of Brexit and general election risk grow. The opposition leaders are meeting today to discuss tactics, with a goal of many lawmakers to try to prevent a no-deal Brexit. The UK PM has said he will obey the law but also insists Brexit will happen at the end of October no matter what. Uncertainty over Brexit remains and expect GBP volatility to continue. 35 days until Brexit deadline.