Forex news for North American trade on October 11, 2019:
- Gold down $5 to $1489
- WTI crude up $1.36 to $54.91
- US 10-year yields up 6 bps to 1.73%
- S&P 500 up 32 points to 2970
- GBP leads, JPY lags
The US-China trade deal finally arrived but high hopes for something comprehensive were significantly whittled down over the last few weeks and we ended up with something that essentially boiled down to soybeans for a tariff delay. Most importantly, the Dec 15 tariffs are still scheduled to be implemented.
Risk trades rallied ahead of the official announcement but there was a considerable sell-the-fact trade afterwards as the S&P 500 fell to 2970 from 2992 in the aftermath. The moves were more-subtle in yen crosses and commodity currencies but they finished off the highs.
The pound was the big story as the EU and UK move towards a real detail. Negotiators will now enter “the tunnel” which is a quiet period where details are hammered out. There probably isn’t enough time to complete a deal before Oct 31 but that doesn’t really matter so long as it’s on track to get done with a short extension. The week ahead (and weekend) will be critical. The pound capped its best two-day rally in a decade with a 225 pip rally, but finished 40 pips off the highs on a bit of position squaring.
USD/CAD fell after yet-another strong Canadian jobs report. The headline was coupled with strong full-time numbers and wages . Heavy gov’t hiring was a bit of a caveat but it didn’t matter much to the pair, especially with risk trades higher and oil up 2.5%. The immediate drop was to 1.3215 from 1.3280 and that eventually extended to 1.3170 before a 25 pip bounce late. The close was the lowest in a month. Note that Monday is a holiday in Canada.
The euro rose for the third day and hit a three-week high but the peak came as New York arrived and there was a minor double top at 1.1063 before a fall to 1.1031 late. We finished at the worst levels of North American trade.
Have a great weekend, it was a fun week in markets. Given the lack of a China resolution, there will be more lively weeks to come.