Thursday January 2nd, 2020

2020 starts on an optimistic tone with the US President saying that the Sino/US trade agreement will be signed. The Phase One agreement signing ceremony is scheduled to take place on January 15th at the White House. Trade-exposed currencies remain firm boosted by the announced signing date, but US$ has rebounded today erasing some of the late gains of 2019. The Phase Two negotiations will start soon and is expected to create further currency volatility. Intraday investors will focus on US initial Jobless claims and Market Manufacturing PMI for direction.

Oil prices remain firm on the back of rising ME tensions and the announcement of the Phase One trade agreement signing. C$ gave back some of the gains from Tuesday, but remains firm supported by stronger on oil and general economic optimism. Canadian Market Manufacturing PMI data out today will be watched closely along side US data for intraday direction.

Euro failed to cleanly breach key 1.1250 on Tuesday and has weakened back below 1.1200 this morning. The announcement of a signing date is positive for Euro going forward, look for 1.1140 to provide short term support for the currency. Euro was expected after over extending its rally Tuesday in thin trading and year end US$ position adjusting. Bias remains positive for Euro going into 2020.

GBP remains above the key 1.3115 level, as it focuses on Jan 31st withdrawal from the EU. Concerns remain high for a Hard Brexit as EU/UK trade negotiations deadline looms for Dec31st 2020. GBP remains vulnerable to further volatility, but the prospect of a still stronger GBP remains in place.