No quiet on the northern front No quiet on the northern front No quiet on the northern front

No quiet on the northern front

Forex 4 minutes to read
MO
Michael O’Neill

FX Trader, Loonieviews.net

Summary:  While hopes of a US/China trade settlement at the G20 meeting fade, China has intensified on another front by taking umbrage at Canada's stance on the Hong Kong protests.


The US/China trade war has reached a stalemate. Both sides traded tariffs and insults and are now awaiting the G20 meeting in Osaka, Japan, to see if presidents Trump and Jinping can restart the negotiations. That isn’t a sure thing. On Thursday, National Economic Advisor Larry Kudlow said there aren’t any formal plans for the two leaders to meet. 

It is not all quiet on the northern front. China has launched an offensive and Canada is getting battered. China remains exceptionally irritated by the arrest of Huawei CFO Meng Wanzhou at the request of the America’s. They believe Canada stuck its nose in where it didn’t belong. And they are punching said nose.

After Wanzhou’s arrest, China arrested two Canadians and charged them with spying. Prime Minister Trudeau reportedly called to intervene. China refused to accept his calls. China suspended licenses of two Canadian canola exporting companies, and Chinese buyers are unwilling to buy Canadian canola. China was the market for 40% of that product worth about $2.7 billion in 2018. China announced that Canadian pork and meat imports would receive extra scrutiny. 

China also objected to Canada foreign affairs minister Chyrstia Freeland defending Hong Kong residents’ right to protest. China responded, saying “Recently, some people from the Canadian government made irresponsible and erroneous comments on the Hong Kong [Special Administrative Region] government’s amendment to the ordinance and other Hong Kong affairs.” We deplore and firmly oppose this.... We urge the Canadian side to exercise caution in its words and deeds, stop intervening in the normal legislative process of the Hong Kong SAR, and stop in whatever form interfering in Hong Kong affairs and China’s domestic affairs.” 

 Communication between the two nations is a tad difficult. Canada never replaced its Ambassador to China after he was fired for apparently supporting Meng Wanzhou’s extradition defence. China’s Ambassador to Canada was reassigned to France last week.

The impact from the US, China, Canada trade dispute was a major factor in the Bank of Canada’s dovish monetary policy shift a couple of weeks ago. The increased risk that Canadian interest rates may be cut as early as October, combined with rising US/Iran tensions, increased risk aversion sentiment from Brexit and eurozone developments and the US/China trade talks impasse suggests that USDCAD strength ahead. The short term technicals are bullish following the rejection of losses below support in the 1.3250-70 area and the subsequent rally above resistance at 1.3350. A decisive break above 1.3420 would target further gains to 1.3550.
Chart:USDCAD daily. Source Saxo Bank
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.

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

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

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 may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

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

The information or the products and services referred to on this site 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 are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

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