Friday October 4th, 2019

US$ weakness continued, the US$ index falling almost 1% for the week, as investors switched to Yen and Euro. Concerns that the weak manufacturing and services data this week were showing sign that the U.S. economy is losing momentum and instigated the US$ selloff. U.S. Non-Farm Payroll data today. A weak NFP number will increase expectations of further Fed cuts & increased US$ selling. The US impeachment inquiry continues, which is having limited impact at the moment, but it could impact US$ longer term. Fed Chair Powell is speaking today & markets will look at his comments closely following the NFP data.

C$ remains close to its one month lows vs US$, C$ has weakened by the prospect of a US economic slowdown and its knock on impact to Canadian economy. Oil prices have firmed, but the focus today remains squarely on NFP data out of the US. Longer term, in a poll of 50 analysts they expected C$ will rally targeting to 1.32 within a month and  1.3058 within a year. Today watch for the Canadian trade data being released this morning, which may impact C$ direction.

Eur continued to strengthen despite concerns Germany could slip into a recession. The Eur benefited from US$ weakness and rallied from its 2 1/2 year low set on Tuesday. The market will focus on NFP and UK PM’s plan B proposal for Brexit.

UK PM’s Brexit proposal wasn’t accepted by the EU and they have given the UK until October 11th to present a new plan. Some signs of optimism were seen as a number of opposition MP’s were potentially backing his accord. GBP rallied initially, but retreated slightly as it awaits the EU’s response to Plan B. 27 days to Brexit deadline.