Global “Risk” concerns eased somewhat after the release of stronger than expected Chinese trade data showing July exports rose 3.3%. Additionally Beijing’s proactive efforts to slow the weakness of the renminbi, helped boost global market sentiment. The ongoing trade tensions continue to dictate market direction as we await the next round of trade talks in September and proposed US tariff increases. This week has seen NZ, Thailand and India cut interest rates, which is becoming a global central bank trend. Expect additional pressure on the Fed to cut rates further and the possibility is growing that BOC may also review its current interest rate stance.
C$ recovered from a 7 week low as oil prices firmed on the back of the Chinese trade data. Given the current economic conditions, our bias remains to buy US$ dips. No Key data out for Canada today, but tomorrow sees the release of Canadian unemployment data.
Euro which is down 2% for 2019 and continues to remain under pressure. The markets are focused on the European Central bank meeting next month where they are expected to cut interest rates. Given the current economic environment and upcoming Brexit, our bias remains to sell EUR on any rallies.
A recent Reuters poll suggests that GBP is forecasted to trade between 1.17 & 1.20 vs US$ in the final run up to Brexit. GBP held above the key 1.2080 level and has rallied slightly from the positive Chinese trade data. Brexit news continues to be the primary driver and expect volatility to remain until decision is made.