NY Open: Trade deal or no deal?

Forex

Trade tensions have elevated. In the global poker game that is FX, jokers are wild and President Trump is the Joker. Yesterday, Bloomberg reported that Trump planned on slapping tariffs on $200 million of Chinese imports and that set the tone for today. Global equity indices are down, and Wall Street is following suit. US Treasury yields slipped with the long bond yield below 3.00% again. 

The renewed focus on US/China trade not just taken the spotlight off the US/Canada trade talks: it knocked them off the stage. Trump’s trade bluster has hammered the commodity currency bloc with the AUD vying with the CAD for the worst-performing currency honours since New York opened. The Canadian dollar is the winner, so far.

USDCAD climbed 0.2% overnight and rallied another 0.55% since New York opened. Stop-loss buying fueled the gains. The Canada/US trade talks are on-going. President Trump said “Canada’s going to make a deal at some point. It may be by Friday, or it may be within a period of time. I think we’re close to a deal.” His statement didn’t give the Canadian dollar any support.

Arguably, some sort of agreement, a framework of a contract or a handshake deal will be announced today, mainly because Canada can’t afford not to sign one. If so, USDCAD will plunge, as a lot of the short positions have been covered.

The week ahead will start off slow because of holidays in the US and Canada although Australia Retail Sales data and Caixin China PMI data will give Asia FX something to chew on. That and any Trump comments on the weekend. The Reserve Bank of Australia and the Bank of Canada provide the central bank action. Both are expected to leave rates unchanged. The week will end with a bang with the release of the US employment report. The forecast is for a gain of 187,000 jobs.

The rumoured US dollar selling for month-end portfolio rebalancing purposes is proving to be more fiction than fact. The US dollar index is in an uptrend above 94.40 with a break above 95.00 suggesting gains could accelerate. A move below 94.30 would negate the upside pressure.
USD Index (source: Saxo Bank)
Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Pty Ltd.
Level 25, 2 Park Street
NSW 2000
Sydney
Australia

Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Combined Financial Services Guide & Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.