Monday August 26th, 2019

What a difference a weekend makes. Friday’s the tit-for-tat trade tariff increases from China & US saw safe-haven currencies rallying to fresh highs. Monday opens on a much more consolatory tone with China wanting “calm negotiations” and a willing for both sides to resume talks. The G7 summit saw US President opening the door for diplomacy with Iran and a deal with France on Digital tax. With the exception of safe-haven currencies, the majority of currencies remain relatively static within their current ranges. Watch for comments from the G7 meeting and US Durable goods data out this morning.

Despite fluctuating oil prices and the ongoing trade comments, C$ remains stable trading at the midpoint of its recent trading range. The possibility that China/US sit down to trade talks, Fed Chair keeping the door open to rate cuts in Friday speech, can all be positives for C$. Expect C$ 1.3250-1.3350 range to hold until we gain more clarity on trade negations.

Data out today showed the German business sentiment fell to its lowest level since 2012. Eur rebounded from Friday’s high on generally stronger US$, weak data numbers and Brexit resolution impasse. Markets will continue to focus the G7 summit and related comments. Expect Euro to hold above recent lows.

GBP weakened slightly, but remains relatively strong despite perceived worsening of Brexit talks between both UK PM and EC President. Comments showed both leaders putting responsibly on each other for failing to progress Brexit negotiations. Reports are also circulating that UK PM is seeking legal advice to bypass parliament. GBP remains vulnerable to weakening as Brexit approaches the Oct31st Deadline.