After a robust Non-Farm Payroll report on Friday, the USD remains better bid as we being the week. Not only did the NFP report of 266,000 beat the expected number of 183,000, but the upward revisions of 41,000 for the last two months were unexpected as well. This number release will certainly be on the minds of the FOMC as the Fed meets on Wednesday and is expected to keep policy and rates steady at 1.50-1.75%. Most observers expect the next rate moves to be a cut again during the first half of 2020. The main focus for traders will be Fed Chairman Powell’s comments at the press conference following the meeting.
Christine Lagarde will preside over her first ECB meeting on Thursday and the expectation is that there will be no change in Euro rates. However, there will be new projections for CPI and growth and these could affect the EUR moving forward. Traders will be focused on the Lagarde’s press conference following the meeting. The single currency is slightly lower this morning, feeling a bit of the pressure of a stronger USD.
The British Pound remains strong to start “election week” as the Conservative Party holds their 10 point lead ahead of Thursday’s election. The Conservative Party needs to win 340 seats out of 650 to ensure a majority and enable a decision on a Brexit deal between the UK and the EU. A Conservative win may push the GBP to continue to move higher. The actual timeline for the election points to early Friday morning to determine the results.
USD/JPY is trading lower this morning after third quarter GDP beat expectations moving to 0.2% up from 0.1%. Despite concerns of global growth, Japan’s economy has grown for the fourth consecutive quarter. Aiding the JPY are concerns over the US-China trade talks as traders once again move into JPY as a safe haven bet.
After a multiple days of showing strength, the Canadian Dollar moved lower in early trading as Brent Crude Oil Futures dipped due to data showing Chinese export continuing to decline. Reports over the weekend showed that the US, Canada and Mexico are moving closer to the new USMCA agreement.
November Chinese exports fell 1.1%, below expectations for the 4th straight month. The trade surplus narrowed to $38.7B, down from $42.8B. With the 17-month trade war dragging on this contraction number does not bode well. Concerns are now focused on December 15th when the new tariffs go into effect.