Monday January 13th, 2020

The easing of ME tensions has seen investor focus shift back to Wednesdays signing of the Sino/US trade agreement. The Chinese CNY hit an almost 6 month high, but other trade-exposed currencies remain muted. Expect trade-exposed currencies to rebound vs US$ ahead of Wednesday’s trade agreement signing. In other news Iranian protests continue for a 3rd day and could repercussions on oil prices again. US impeachment articles are expected to be sent to the senate this week. No key data out today, expect the market to remain focused on the ME and Sino/US trade comments for direction.

Oil prices firmed slightly as the market shifted focused from the ME to US/Sino trade, The trade agreement is expected to boost economic growth and oil demand. C$, a “trade-exposed’ currency should be set for a positive week with the signing of the trade deal. The prospect of stronger global growth and firmer oil prices should see the currency set for a retest of 1.2940. Intraday investors will watch the BOC business outlook survey release for direction.

Euro is starting the week on a positive tone ahead of Wednesdays signing of the Phase One trade agreement. The US$ remains weak after Fridays disappointing Non-Farm Payroll data, allowing Euro to break above the 1.11 level. No key data out today, so we expect Euro to trend within its current range.

GBP came under renewed pressure as GDP data highlighted the UK economy grew at its slowest pace in 7 years. The weak data has increased speculation that the BOE may look to cut rates, which saw GBP test key 1.3000. The harsh realities of 3 years of Brexit and its impact on its on the UK economy is a concern for investors. The focus has clearly switched back to economic releases as Brexit moves forward.