Wednesday July 31st, 2019

Currency markets were quiet and range bound ahead of the Fed rate decision and the Fed chief’s comments. Slightly sideline, but still important is the US/China trade talks in Shanghai which have potential to impact the markets as well.

Any deviation from the widely expected 25 basis point cut in interest rates by the Fed and related comments could significantly impact markets today.

C$ firmed slightly on stronger oil prices and anticipation of Fed interest rate cuts. The current market scenario is positive for C$ and the potential to retest 1.3050 is good. Canadian GDP data today, but the primary market focus is the Fed’s interest rate decision.

Eur continues under pressure with Euro-Zone economic growth falling 50% Q1 vs Q2 19 and headline inflation at 17 month lows. On a positive note unemployment across the Euro-Zone hit an 11 year low. Brexit and anticipated ECB response to a Fed rate cut will keep negative pressure on the Eur.

After four days of GBP weakness the sell off stalled allowing the currency to bounce slightly. The elephant in the room remains the prospect of a “No-Deal” Brexit and expect GBP volatility to continue.