Thursday August 15th, 2019

Recession risk remains the markets primary focus after the US bond yield curve inverted on Wednesday for the first time since 2007. US/China trade tensions is growing as China threatens countermeasures to tariffs. The US made comments about Hong Kong’s “special status” and to tie a trade deal to a humane resolution in Hong Kong. Equity and commodity markets remain volatile, whereas currency markets are stable in comparison. US Retail Sales data this morning will be closely watched and should provide intraday direction to the US$.

C$ remains within current trading ranges despite oil prices falling over 3% over the last 24 hours. C$ is a growth sensitive currency and under a “recession risk” environment, C$ is vulnerable to further weakness. Bias remains to buy USD dips.

Eur found some support after yesterdays sell off on the weak European GDP data. The rising of China/US trade tensions could see EUR retest the lows seen August 1st.

GBP is higher this morning on the back of better than expect retail sales data. On the political front, the UK opposition leader begins a campaign to rout PM Johnson by asking lawmakers to back a no confidence vote, create a caretaker government & prevent no-deal Brexit. Potential for further GBP weakness remains high ahead of a Brexit resolution.