Tuesday January 14th, 2020

Sino/US trade optimism continues as China pledges to purchase almost $80 billion of additional manufactured goods and the US drops the FX Manipulator label. December Chinese trade data showed that exports and imports both jumped, helping the CNY hit fresh 6 month highs. The CHF is at an almost 3 year high vs Euro after the US’s re-inclusion of Switzerland on the currency manipulator watchlist. Intraday investors will focus on US CPI data released this morning for direction.

Expectations that US oil inventories could fall this week and the signing of the Sino/US agreement has helped Oil snap its 4 days of declines. C$ remains within a narrow trading range with oil prices rebounding and ahead of Sino/US trade agreement signing. The signing of Phase One agreement is viewed as positive for C$ and the bias remains for a stronger C$ into 2020. Expect C$ to remain relatively quiet today unless we see any surprises from the US CPI data release.

Euro manages to hold above the key 1.11 level supported by Sino/US trade optimism, but US attention could now switch to US/EU tech taxes. The EU chief trade negotiator is in the US for 3 days of negotiations to discuss tech taxes and auto tariffs. Concern is growing that the US attention will switch towards the EU after the Sino/US trade agreement is signed. Intraday US CPI data will provide short term direction to the Euro.

GBP hit 7 week lows vs Euro with uncertainty over the future EU/UK trade relationships after the UK Brexit on January 31st. Trade concerns coupled with weak UK data and the prospect of a possible BOE rate cut has seen GBP come under renewed selling pressure.