Monday October 15, 2019

North American markets return from a long weekend attempting to digest the results of a partial US/Sino trade deal and positive Brexit talks. GBP rallied to a 5 month high vs Eur buoyed by positive Brexit news. Oil prices fell over 2% and commodity currencies stalled vs US$, with investors skeptical on the outcome of the Sino/US trade talks. The absence of concert details on the partial Sino/US trade has taken away the initial market enthusiasm. No key data out today, so the focus will remain on trade talks comments and the impeachment enquiry for direction.

C$ continued to trade at the lower end of its recent band despite weaker oil prices. Oil prices weakened sharply on weak Chinese data and confusion on the actual trade talk outcome. Weaker oil and fading trade talk enthusiasm could see C$ weaken slightly today.

The German ZEW Economic Sentiment came out at -22.8, which was above expectations and supported EUR. Initial optimism for the partial Sino-US trade deal is waning as the market awaits further details. Positive Brexit news is supporting Euro today, but Euro remains vulnerable to further weakness.

GBP is trading below the 5 month high, but remains strong after the Chief EU Negotiator Barnier said a deal is still possible. UK wage growth is mixed with 3.8%. Focus remains squarely on Brexit talks which are far from completed, expect GBP to remain volatile.