Tuesday October 13th, 2020

Strong Chinese Imports, stalled vaccine testing and pessimistic IEA report sees mixed market responses. China’s September imports surged at 13.2% its fastest pace in 2020, and with exports growing at 9.9% YoY. The strong signals out of China boosted commodity markets. Johnson &Johnson halts tests of its vaccine due to an unexplained illness in a participant. In a report the IEA said the low economic recovery from the pandemic threatens to delay a full rebound in world energy demand until 2025. Markets open mixed with the US$ a touch stronger, equity markets lower and currency markets mixed. Aud is down ¼% with reports China halts coal imports. CNY up 0.15% after its positive trade data, while Asian currencies are flat on average vs US$. Trading currencies are mixed with NZD & MXN up 0.2%, ZAR up 0.3% while NOK is down 0.1% vs US$. Intraday focus remains on US Stimulus news, and key US CPI data out this morning. 

Oil prices rise on strong Chinese trade data results, as Chinese oil imports rises 2.1% month over month. Global supply returns as the Norwegian oil strike ends, US Gulf Coast rigs come back online and Libyan Oil exports resuming, which will likely cap oil strength. C$ remains firm on stronger oil prices. C$ is trading within a key trading range, any weakness in Oil will likely see a break of 1.3140. No Canadian data out today, US$ and Oil will drive intraday direction. Support 1.3082 (8 Sep), if breached 1.2990 (1Sep) with resistance at 1.3140, if breached 1.3220.

Eur remains under pressure failing to extend amid mixed ZEW reports and a strengthening US$. EU economy remains under pressure from surging virus cases across the continent with several countries reporting their highest daily cases since the start of the pandemic. Focus shifts to the EU summit 15-16Th October with the EU economy and Brexit likely to remain center stage. Support at 1.1700 and with resistance at 1.1850.

GBP remains strong as markets focus on Brexit hopes, ignoring BoE concerns and rising COVID lockdowns. Brexit remains front and center with the EU Chief Brexit Negotiator telling EU ministers that there was some movement in Brexit, but still not sufficient. The BoE yesterday reached out to UK banks asking their preparedness for zero interest rates. UK PM announced increased lockdown measures, increasing political pressures on the ruling party. Brexit news remains the markets primary focus. Support 1.2950 with resistance rising to 1.3080.