Friday January 17th, 2020

China’s economy grew at 6.1% in 2019, its slowest expansion in 29 years. Positive December Chinese industrial output also released jumped 6.9% annually providing positive encouragement for 2020. Chinese CNY vs US$ hit a fresh 6 month high on the Industrial output data. Safe-haven currencies remain under selling pressure whilst trade-exposure currencies are slowly rebounding. The US impeachment trial is expect to begin next week, but with expectations of an acquittal we expect limited impacted on the US$. US housing data and several Fed governors speaking today could provide intraday direction to US$.

Oil prices increased moderately supported by the Sino/US trade deal and falling inventories. OPEC+ March meeting is coming into focus with speculation OPEC may change its strategy of managed supply. C$ continues to remain trapped within a tight trading range despite stronger oil and the signing of the trade deal. Concerns that BOC may cut rates has been creating some concerns for investors. US data may provide an opportunity for C$ to break its current range.

Euro is struggling to retain its strength vs US$ amid rising EU-US trade tensions as US focus switches away from China. The EU commissioner for trade in Washington said that the US President is “Obsessed” with the US trade deficit with Europe. Positive US data and concerns of further US tariffs on the EU is having an impact on Euro. EU CPI data came out within expectations and now the market will watch US housing starts for direction.

GBP remains under pressure after the release of disappointing UK retail sales data. UK retail sales fell 0.6% in December raising the prospect of BOE rate cuts at the end of the month. Expect GBP to remain under pressure in January ahead of its departure from the EU on the 31st. A break of 1.2900 could see further sell off towards 1.2780 with 1.3220 providing topside resistance.