Friday October 18th, 2019

China’s 3rd quarter growth slowed to its worst level in nearly 30 years as the effects of the US tariffs impacted production. Sino/US have reached a first phase agreement suspending further tariff hikes, but the data is evident that further talks are required.  Investor focus is shifting to the FOMC meeting at month end and the prospect of a further Fed cut. The prospect of further US rate cuts, positive trade & Brexit tones is keeping the US$ under pressure and is boosting the commodity currencies. No key data out in North America, but several Fed members are speaking and may impact markets today.

C$ continues to gradually strengthen reaching close to 3 month highs vs US$. As an exporting nation the positive US/Sino trade talks & Brexit news has helped strengthen the loonie. Oil prices edge slightly stronger with rising crude inventories being offset by reduced production. Canadian elections on Monday and any surprises may have a short term impact on the currency.

Euro continues to hold near its 2 month highs supported by positive Sino/US trade and Brexit expectations. A No vote by the UK parliament on the proposed Brexit deal, will have a negative impact on the Euro. Equally a Yes vote could see the Euro possibly retest highs seen in Jun19. No key data today, so expect Euro to swing on related Brexit comments.

GBP continues to remain strong vs US$, boosted by the prospect of a Brexit deal. Focus will be on Saturdays parliament sitting and vote on UK PM’s Brexit proposal. The prospect that the UK parliament may vote down the agreement remains high. In the case that Brexit plan isn’t passed, the prospect of an extension and a snap election is quite high. 13 days to Brexit deadline and expect GBP to remain volatile.