Wednesday August 21st, 2019

Markets have calmed as investors await the FOMC minutes tonight, as well as the Fed Chairs Speech from Jackson Hole Friday & the G7 meeting at the weekend. US$ was supported by news that the US administration is considering tax cuts on wages and that Japan/US trade deal is making progress. Intraday expect markets to remain within recent ranges, until the FOMC minutes are released.

C$ held below key 1.3350 resistance and strengthened on stronger oil prices, as data showed a larger than expected drop in US Crude inventories. Investors will focus on CPI data out later this morning, any break from expectations could impact C$ movement today.

Eur firmed slightly today despite the resignation of the Italian PM. The Italian President will hold two days of talks to explore if a new government can be formed or if a general election is required. Expect Eur to remain within its current range, waiting for direction from FOMC and key Euro PMI data tomorrow, as well as ECB meeting accounts. Bias remains to sell Eur on any rallies.

UK PM heads to Germany, “Merkel had said on Tuesday that she was open to “practical solutions” to the Irish border insurance policy”. Euro ministers appear to be firm that the Withdrawal Agreement won’t be renegotiated and the prospect of a No-Deal Brexit remains. G7 summit may provide some fresh headlines on Brexit, until then GBP remains vulnerable to further sell off.