Friday October 25th, 2019

The currency markets, with the exception of GBP, continue to trade within a relatively narrow trading band. The EU approved the UK’s request for an extension to the Brexit deadline. European central bank kept rates on hold and now the focus will switch to the FED meeting next week. The Sino/US trade negotiations continue, with reports that China is requesting a reduction in tariffs in return for increased purchases of US Farm products. No key data out today so expect the markets to remain within recent ranges.

Oil prices are ending the week firmer, supported by falling US crude inventories. The C$ continues to slowly grind stronger vs US$, on track to test key 1.3030 level. Stability in US/Sino trade talks and a possible cut in US interest rates by the Fed could add to further C$ strengthening. A clear breach of the 1.3000 level opens the door to significant C$ strengthening to Oct2018 levels of 1.2780.

Euro continues to trade above 1.1100 as ECB left rates unchanged but commented it may ease rates if required. EU leaders approved the UK’s request for an extension with final details being released by Tuesday. The German IFO survey came out better than expected. The data suggested that German moral is growing for the condition of German economy. The UK direction of Brexit will give Euro direction in the coming week.

Brexit uncertainty continues as the UK PM has suggested December 12 to hold a snap election. Opposition parties want to secure a no-deal Brexit first. The EU has agreed to the UK’s request for an extension with EU leaders finalizing the date this weekend. The market sentiment is that the UK could be reaching the end of its current stalemate, with hopes of a Brexit solution in sight.