Thursday October 31st, 2019

The FED cut rates by a 1/4% as expected, commenting that it will hold rates unless the economy takes a turn for the worse. The US$ weakened vs the majority of major currencies on the Fed news, with CNY rallying to an almost 3 month high. Sino/US trade concerns appear to be growing as its commented that Chinese officials remain skeptical on the long term trade deal with the US, under the current administration. Intraday a number of US data releases out today could provide US$ direction.

BOC kept rates on hold, but the C$ weakened quite sharply with the prospect of future rate cuts. The BOC said that Canada will “be increasingly tested as trade conflicts and uncertainty persists”. Oil prices firmed overnight, but the break above 1.3130 is significant should provide a US$ support level. A number of Canadian data numbers out today including GDP could give direction to C$ intraday.

The Euro rallied after the Fed cut rates and signaled a pause in future rate cuts. European data showed EU inflation rising and the prospect of an end to Brexit gave Euro an additional boost. Momentum has returned to the Euro and the single currency needs to breach 1.1250 (Aug19 highs) to sustain its momentum.

GBP continues to strengthen posting its strongest months rally in almost a decade. A combination of FED cutting rates and  prospect that an end to the Brexit saga is insight. Despite UK PM promise to leave Brexit today with or without a deal, he has kept his support after he secured a date to hold the next UK election. The outcome of the Dec 12th election is critical to decide the fate of Brexit.