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Daily Brief

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Brexit deal agreed

USD

US Treasury Secretary Mnuchin stated yesterday that phase one of the US-China trade agreement is being written and it is the administration’s objective to have the agreement ready to sign by both Presidents at the APEC summit in Chile on November 16-17. This agreement is expected to include protection of American intellectual property rights in China, as well as structural agricultural issues and currencies. Chicago FED President Evans stated in a speech yesterday that he expects the US economy to grow “a touch above 2% this year”, which is not far from his estimate of the economy’s long run growth rate of 1.75-2.00%. He also said he is keeping an open mind, but expects no change in interest rates through the end of 2020. The FOMC meets later this month and most were expecting another rate cut of 25 bps. 

EUR

A poor retail sales release by the US yesterday is weighing on the greenback. Headline retail sales fell 0.3%, while core retail sales fell 0.1%, both missing estimates. Data for the previous month was revised higher, but that did not dissuade traders from selling. EUR/USD continues to consolidate, as traders exit short positions. 

GBP

The GBP has moved higher on news that the UK and EU have agreed on a Brexit deal. The UK made concessions over the Irish border, an issue that had proven to be the biggest obstacle facing a deal. UK Prime Minister Johnson stated “we have a great new Brexit deal” and called on British lawmakers to back the deal when it is put in front of Parliament on Saturday. 

JPY

Traders continue to sell off their safe haven JPY positions as Brexit and trade talks show positive signs. As these two news events dominate traders’ thoughts, the JPY could remain sidelined. 

CAD

Canada headline CPI dropped -0.4% MoM in September, much worse than the expectation of 0.0%. Annually, CPI was unchanged at 1.9% year on year, below expectation of 2.0% year on year. However, CPI core common rose to 1.9% year on year, up from 1.8% and beat expectation of 1.8%.

CNY

A Chinese Commerce Ministry spokesman said in the last hour that their aim is to end the trade war and remove all tariffs, as they continue to work on the phase 1 text of the agreement and begin formulating discussion points for phase 2.

USD: Trade agreement due to be signed at AFEC meeting. Chicago FED President say no more cuts.

USD: Trade agreement due to be signed at AFEC meeting. Chicago FED President say no more cuts.

EUR: EUR gains strength after US retail sales fall.

EUR: EUR gains strength after US retail sales fall.

GBP: UK and EU strike new Brexit deal.ach Varadkar of Ireland boost the GBP

GBP: UK and EU strike new Brexit deal.

JPY: Safe haven selling continues.

JPY: Safe haven selling continues.

CAD: Canada CPI unchanged at 1.9%, but core CPI accelerated.

CAD: Canada CPI unchanged at 1.9%, but core CPI accelerated.

CNY: Ministry spokesman says aim is to end trade war and remove all tariffs.

CNY: Ministry spokesman says aim is to end trade war and remove all tariffs.

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