USD

The first day of trade negotiations between the US and China apparently went very well. President Trump is scheduled to meet with Chinese Premier Liu He today at the White House. Comments from US negotiators also were positive as negotiations are “trying to find a path toward a bigger deal”. If these talks continue to go well, there is a possibility of the US not putting forth the tariff hike on October 15.

EUR

EUR/USD trading in a quiet range overnight, as the market awaits a speech later today from ECB President Draghi. ECB meeting accounts confirmed the divided opinion among policy makers on the stimulus package, in particular QE. Downside risks still remain for the EUR/USD and any negative response to Draghi’s remarks could send the EUR/USD lower.

GBP

The British Pound was the main mover overnight as the comment “a pathway to a possible Brexit deal”, rallied the GBP/USD. UK Prime Minister Johnson and Irish Taoiseach Varadkar negotiated for three hours discussing details of a deal. The official statement following the meeting included a commitment to continue negotiations both at home and in Brussels today. Reports include different scenarios for the UK exit, with one option a “Free Trade Agreement” that would replace parts of the Brexit “Withdrawal Agreement”. PM Johnson still needs to gain support for this agreement from Parliament, and the EU must agree to this as well. Most analysts expect the EU to go along with any agreement that Varadkar approves. Parliament will meet in a special session on October 19, after the EU Summit on October 17-18. GBP will be at the mercy of any comments going forward and any negative comments could set of a major selloff of the GBP.

JPY

USD/JPY moved higher overnight, as positive trade-related headlines weighed on the JPY safe haven status. President Trump comments last night that talks were going well and a deal could be reached gave traders hope and JPY sales were initiated.

CAD

The Canadian Dollar rallied overnight on the back of a missile attack on an Iranian tanker in the Red Sea. Oil prices rose 2% overnight after Iran claimed two missiles struck one of their tankers. Officials said the tanker had been traveling through the Red Sea off the coast of Saudi Arabia when it was hit. Saudi officials did not immediately comment about the attack. Brent crude rose to $60.33 a barrel, with West Texas futures showing similar gains.

CNY

While most analysts have low expectations over any trade deal coming from these negotiations a limited deal would be a positive step forward. If tariffs are postponed from their scheduled start markets should react in a very positive way. Concerns here are the possibility that any deal reached between the two countries will not last. In the past it seemed the two countries were on the verge of agreement only to see talks collapse and the tariff fight escalate all over again. Investors will have to be convinced that a deal is for real this time.