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NY Open: Trump circus comes to Argentina

Summary:  Financial markets do not appear to be holding out much hope for a resolution of Sino-US trade hostilities at the G20 summit.


President Trump is in the centre ring at the G20 circus in Buenos Aires, Argentina. Markets are hoping for a thaw in trade hostilities between China and the US. However, this morning’s price action suggests traders don’t have a lot of confidence in that view. Trump may (or may not) meet with Russia President Putin. Ukraine issues have returned to the front pages as have Trump’s business dealings with Moscow.

The US dollar has posted small gains (as of 13:45 GMT) against the major G10 currencies since the open. EURUSD, dropped the most, supported by a jump in Chicago PMI. (Actual 66.4 versus a forecasted 59.4).

USDCAD had a moment of volatility as well. Prices whipsawed in a 1.3274-1.3325 range when Canadian GDP data were released. September GDP was -0.1% (forecast at 0.1%) while Q3 GDP was as expected, at 2.0%. The currency pair quickly returned to pre-data levels. 

November was a volatile month for FX, and the US dollar is finishing it on a mixed note. The New Zealand dollar was the best performing currency gaining 5.45%, supported by a series of strong economic reports. The Canadian dollar was the weakest of the G10 majors, losing 1.30%, due to sharply weaker oil prices, which lost 22% in the month. GBPUSD was extremely whippy in a 1.2690-1.3175 range for the month but is finishing virtually unchanged.

Wall Street opened with minor losses but barring a major meltdown will close the week on an up note. Traders are cautious ahead of the trade talks at the G20 meeting on the weekend

Oil prices have extended European losses. WTI broke the $50.00/barrel level again, touched $9.68/b and is now sitting at $49.84/b. Traders are concerned that even if Opec manages to agree to production cuts, they won’t be enough to offset rising global supplies.

The week ahead is the beginning of the end – for 2018. Seasonal holidays make it a very short month, but a lot of significant events and data are crammed into the available days. The US employment report is expected to be robust with forecasters predicting a gain of 220,000 jobs. Eurozone PMI data is on tap while EU/Italy budget talk headlines and Brexit news are the wild cards. The Reserve Bank of Australia meeting is Tuesday, and it's widely expected to leave rates unchanged. The Bank of Canada meeting is Wednesday and like the RBA, it is expected to leave rates unchanged. The quarterly Monetary Policy Report is also released.
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GBPUSD (hourly, source: Saxo Bank)

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