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Daily Brief

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Focusing on US-China trade deal

USD

Trade talks are the focus of traders as the day begins. It appears that China is willing to agree to a trade deal with the US on specific topics but would rather wait until next year to discuss the more sensitive ones. President Trump said yesterday that he was hoping both countries could agree on a full deal. When he was asked about the talks providing a deal, he replied; “Can something happen? I guess, maybe. Who knows? But I think it’s probably unlikely.” China’s Ministry of Commerce confirmed Vice Premier Lui He will travel to Washington for trade talks on Thursday and Friday. Impeachment concerns continue, but according to reports, President Trump’s job approval rating is unchanged. This will continue to be a mainline story moving forward. While Democrats in the House can pass impeachment articles, in order for the Senate to convict the President and remove him from office, at least 19 Republican senators would need to vote for impeachment. At present, most GOP members of the House and Senate appear to be on President’s side.

EUR

EUR/USD could not move higher, despite positive German data released earlier. German Industrial Production rose by 0.3% in August, beating expectations. This release was not enough to reverse negative sentiment created by the sent report released on Monday which came in at -16.8, worse than expected. Traders concern over the EUR seems to be well placed. If a currency does not rise on good news, then it exposes a weakness that may push it lower on the first issue of negative news.

GBP

Brexit negotiations continue in Brussels and this is weighing on the GBP/USD.  The latest plan submitted by British PM Boris Johnson has apparently been rejected by the EU. According to a report by the Institute for Fiscal Studies IFS), a no Brexit deal could send British debt levels to those seen in the 1960s. With the clock continuing to tick, it doesn’t look as if there will be any deal decided soon.

JPY

USD/JPY trading a bit higher after Japan’s PM Shinzo Abe told parliament he expected BOJ Governor Kuroda to make appropriate monetary decisions. There was also evidence that some traders have removed their safe haven trades ahead of the new trade talks. As the talks continue, safe haven trades could return if the talks do not go well.

CAD

WTI crude oil has moved higher, helping support the Canadian Dollar. Analysts expect crude oil to move to $54.15 in the next few days. As oil price move, so moves the Loonie, and at the moment it looks like a positive day for the CAD. Traders will keep an eye on US/China trade talks as well.

CNY

PMI Composite Output Index rose from 51.6 to 51.9. Slower growth in services activity was offset by stronger expansion of manufacturing output. Total new work rose at its quickest pace since February 2018. Job creation showed its strongest increase in employment since January 2013. 

USD: Impeachment investigations continue

USD: Impeachment investigations continue

EUR: EUR lower despite good German economic news

EUR: EUR lower despite good German economic news

GBP: Brexit negotiations continue, but GBP lower

GBP: Brexit negotiations continue, but GBP lower

JPY: Japan’s PM shows confidence in BOJ

JPY: Japan’s PM shows confidence in BOJ

CAD: Loonie higher as crude oil prices improve

CAD: Loonie higher as crude oil prices improve

CNY: China Caixin PMI Composite rose to 51.9

CNY: China Caixin PMI Composite rose to 51.9

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