Tuesday September 10th, 2019

Positive comments by US Treasury Secretary “made a lot of progress” in trade talks suggesting a trade deal is possible. Chinese vice-ministers are expected to travel to Washington mid-September. Growing trade optimism saw investors return to “risk-on” trades with CNY rallying and safe-haven Yen weakening to 5 week lows. On Thursday the ECB is meeting and expectations are for further rate cuts. US CPI is also out on Thursday and will be watched closely for possible Interest rate direction by the FED.

C$ stalled near 6 week highs vs the US$, boosted by stronger oil prices and the resilience of the Canadian economy. The Sino/US trade comments should have a positive impact on C$ and we would expect to see investor interest grow. No key data out this week for Canada, expect to see the currency remain range bound until after the ECB & US CPI data. Sentiment for C$ is turning positive as optimism for a US/Sino trade deal grows.

Comments that the German government is considering a “Shadow budget” allowing Berlin to boost public investment. The demand for German debt is high, if the shadow budget is approved, it would have positive impact on Eur. Intraday Eur has remained stable within its current range, investors are sideline, waiting for ECB decision on Thursday.

UK PM was defeated in his 6th vote in parliament, not approving a snap election. The UK Parliament has now been suspended until Oct14th. The bill blocking Oct31st “No-Deal” exit has now become law. If the PM is unable to secure a deal by with Europe by Oct31, he must seek a 3 month extension for Brexit. GBP responded positively on the news rallying to a fresh 6 week high vs US$. Expect GBP to remain volatile, but with a bias of further strengthening as the No-Deal Brexit has been taken off the table for now. 51 days until Brexit Deadline.