August 7th, 2019

Sino/US trade tensions continues to impact all markets. Safe-haven buying of Yen & Chf & gold which hit 6 year highs. Chinese Yuan remains weak above 7 Yuan vs US$, but positive actions by China reduced some volatility. Reserve Bank of NZ cut rates greater than expected to 50bps weakening its NZD by 2%. US$ remains firm and is expected to continue strong as the trade tensions continue.

C$ hit two month lows vs US$ primarily on the back of falling oil prices. The ongoing trade tensions will continue to create demand uncertainties for oil going forward, keeping pressure on C$. The current scenario has seen the expectations that BOC may cut rates in 2019 grow from 40% to 70%. Bias remains to buy US$ on dips.

EUR remains under-pressure with industrial output down 1.5% M/M June, industrial production fell 1.8% Q/Q 2nd Quarter. The recent data pointing to overall economic contraction and increasing recession concerns for the Eurozone. Expect Euro to remain under pressure and look to sell on any rallies.

GBP has taken a pause from its resent bout of selling, holding close to the 2 year lows. 1.2080 is next key support level (31 month low) any negative Brexit news could see the support easily breached. GBP remains vulnerable to swings in either direction, all driven by Brexit news.