August 6th, 2019

China/US trade dispute enters a new phase as Chinese Yuan hit a decade low vs US$ this week, breaching key US$/CNY 7.00 level. Washington responding to the weaker Yuan by labeling Beijing a currency manipulator. Markets have settled somewhat, with some unwinding of safe-haven currencies and a slight bounce in oil prices. Trade concerns will continue to dominate the currency markets this week.

Despite the 9% fall in oil prices last week, C$ managed to hold below the key 1.3250 resistance level. Oil prices have bounced slightly this week helping the C$ strengthen somewhat. No key data until Fridays unemployment is announced, so expect trade related news to dictate short term direction. Bias remains to buy US$ dips under current market conditions.

Euro starting the sessions stronger, benefiting from GBP and safe-haven selling vs being driven by economic strength. Similar to C$, our bias is to sell EUR on any rallies in current market conditions.

GBP remains dominated by Brexit related news. The PM remains fixed on Oct 31st Brexit deal or no deal causing investor concern and pushing GBP vs EUR to a near 2 year low. No key data out this week until Fridays GDP is announced.