Wednesday August 14th, 2019

Washington signaled a de-escalation of trade tensions by delaying new tariffs set to come in effect in September commenting “we are doing this for the Christmas season”. Washington also announced that Trade talks are set to resume in two weeks. Chinese July industrial output rose at the slowest pace since 2002. 30 year US bond yields falls to record lows signaling a possibility of a recession. US$ firmed vs Yen and Chf and Chinese Yuan firmed on the trade news.

Oil prices weakened on the back of weakening economic data out of China and Europe. C$ remains stable, caught between the positive trade comments and negative economic data. No key data out of North America today and expect C$ to continue within its current range.

Eurozone GDP slows in Q2 as growth in Germany continues to fall due to the Sino/US trade tensions and going Brexit situation. Eur weakened to the lower end of its current range on the weak GDP number, with the potential of a retest of 1.1100 level vs US$.

The gloomy news continues into the UK as the 2year /10 year Gilt curve inverts for the first time since 2008 warning of a risk of recession. GBP is holding above the 3 year low, but the ongoing Brexit issue will continue to keep the currency under pressure.