Sino/US trade and global growth optimism for 2020 has caused the US$ to come under fresh selling pressure. The focus this morning was on China with its central bank announcing new measures to lower borrowing costs and boost the economy. Investors also focused on the EU economy which is showing signs of recovery. The US$ index which has fallen over 1/2% in the last two trading seasons suggesting investor sentiment may be changing. Chicago purchasing mangers index data out this morning may provide some intraday direction to expect quiet trading session.
Oil prices remain firm supported by the positive market tone on the economy and the optimistic trade tones. C$ remains strong vs US$ but failed to advance as strongly as other trade-exposed currencies. The momentum remains in C$ favor and we expect the currency could test July’s lows of 1.3015.
The Euro is opening the weeks trading session testing 1.12 level vs US$. Optimism for global growth appears to be returning despite the fact that the Sino/US phase one trade agreement has yet to be signed. The positive sentiment has seen investors leaving the “Safe-Haven” US$ in favor of Euro and other trade-exposed currencies. 1.1250 the high in August will be the next key hurdle for Euro to break.
GBP rebounded strongly on a general weak US$, US political concerns and despite investor worries of a “Hard-Brexit”. 1.3135 is the next key level for GBP, a breach could see the currency retrace to post-election highs of 1.35 vs US$. The markets remain thin and we may need to wait until after January 6th when the markets fully return to get a true sense of GBP direction.