US$ index rose to a 4 month high as trade tensions continue and the political concerns within the EU mount. The Chinese Peoples Daily newspaper article suggesting possible trade retaliation made investors nervous. In Europe the EU commission potential response to Italy and upcoming elections saw EUR weaken. US manufacturing hit a 10 year low, highlighting the prospect of a global recession is growing.
US$ rallied against C$ with trade tension rising and oil prices falling 1% overnight. US$$ is sitting at the high point of the recent range going into BOC rate decision today. We are not expecting any rate changes today, but the possibility US$ rallies to highs of Dec 18 is strong.
Euro is testing it recent lows as the market focuses on EU commissions response to the Italy and the up coming elections in Austria and Greece. Political uncertainty with the Eurosceptics popularity growing and it could take awhile for investors to feel comfortable being long Eur.
No fresh news from UK and GBP remains at recent lows and vulnerable to weakness.