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Daily Brief

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US recession on the horizon?

USD

According to a survey from the National Association for Business Economics, the risk of US recession is rising, and the main threat to the economy is the ongoing trade war. Also adding to this concern are the continuing slowdown of global growth. Four out of five economists surveyed said they believe the economy is at risk of slowing further, which was up from the 60% who thought so in June. The impeachment inquiry against President Trump continues as a second whistleblower has come forward with supposed first-hand knowledge of the phone call between President Trump and the President of Ukraine. The White House maintains that President Trump has done nothing wrong.

EUR

EUR/USD begins the week under pressure as weak German data pushed the single currency lower. German Factory Orders fell by 0.6% monthly and 6.7% yearly in August. Adding to the Euro’s woes, Investor Confidence in the Eurozone fell to -16.8 in October from -11.1 in September, according to the latest data published by the Sentix research group. This was worse than the expected number of -13.0. This is the lowest number for investors’ morale in more than six years.

GBP

GBP/USD has begun the week trading low as continued uncertainty over Brexit causes concern for traders. There are only a few weeks left until the scheduled exit from the EU on October 31. British Prime Minister Boris Johnson continues to seek changes to how the issue of the Irish border will be dealt with, however the EU and Ireland responded last week that the PM’s latest proposals were not yet good enough to yield a deal.

JPY

USD/JPY moved slightly lower as traders remain concerned that the US and China can finally come to an agreement and end this trade dispute. Optimism over earlier talks has previously proven to be misplaced, so safe haven purchases are proving favourable to investors. As we move closer to Thursday it will be interesting to see how traders react.

CAD

The Canadian Dollar is once again weaker against the USD as traders are ignoring better than expected Trade Balance data released on Friday. The trade balance was -1.0 billion which was better than the expected -1.1 billion. Canadian exports rose in August, however markets ignored this report as US employment data was released at the same time.

CNY

US-China talks begin this week, with Chinese Vice Premier Liu He leading the Chinese delegation. The talks will begin on Thursday, however there is now a growing concern that China is reluctant to agree to the full trade deal the US is seeking. President Trump did say that “if the deal isn’t that full 100% deal, then the US is not going to make it”, while there are those that believe the Trump impeachment proceedings could weigh on the new negotiations.

USD: Economists expect lower outlook based on trade war. Impeachment talks continue.

USD: Economists expect lower outlook based on trade war. Impeachment talks continue.

EUR: EUR lower after economic releases show confidence waning.

EUR: EUR lower after economic releases show confidence waning.

GBP: Lack of a Brexit deal continues to weigh on GBP.

GBP: Lack of a Brexit deal continues to weigh on GBP.

JPY: Safe haven buying returns ahead of US-China trade talks.

JPY: Safe haven buying returns ahead of US-China trade talks.

CAD: CAD weaker as oil price movement hurts the Commodity currencies.

CAD: CAD weaker as oil price movement hurts the Commodity currencies.

CNY: Trade talks to begin this week on Thursday.

CNY: Trade talks to begin this week on Thursday.

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