Markets' uncertain views on trade war solution keep safe-haven assets well bid
Peter Compton " | November 18, 2019
The financial markets continue to look for direction from the on-going trade talks between the US and China. Safe haven assets such as the Japanese yen and US dollar remain popular as weekend trade talks provided little assurances. The British pound continues to rally as expectations of a Conservative party win in upcoming elections diminishes chances of a hard-Brexit.
Tuesday: October Housing Starts, Building Permits
Wednesday: FOMC minutes from Oct 30 meeting
Thursday: Philly Fed Survey and Existing Home Sales
Friday: PMI data and Univ. of Michigan Consumer Confidence for November
November 18, 2019
EUR/USD 1.1057 GBP/USD 1.2954 USD/CAD 1.3227 AUD/USD 0.6802 USD/JPY 108.72 USD/CNH 7.0296 USD/ILS 3.4567 USD/MXN 19.2504 USD/CHF 0.9892 USD/INR 71.8412
The US dollar crept higher as skittish markets await confirmation of a Phase-1 trade deal between the US and China. China’s Liu spoke with Steven Mnuchin and Robert Lighthizer over telephone on Saturday. The Chinese Commerce Ministry said the two sides had “constructive discussions” regarding Phase-1 of the trade deal and agreed to remain in regular contact.GBPThe British pound continues its march higher as markets expect to avoid a hard-Brexit. Boris Johnson’s speech before the Confederation of British Industry (CBI) put a hold on a scheduled corporate tax cut from 19% to 17%. Johnson has said that every Conservative candidate has signed a pledge to support his Brexit deal if elected.
The Labour Party manifesto is expected to include a plan to force companies to give 10% of their shares to workers over a period of 10 years according to newspaper reports.EUR
The euro rallied for a third day vs. the US dollar as it tried to regain 1.11. The euro lost ground to the British pound on polling results showing the Conservative party winning the December 12 election.CAD
The Canadian dollar gave up small gains this morning on trade talk concerns and weaker oil prices. The C-dollar seems to have broken its overall weakening trend and is now moving to establish a stronger trading rate between 1.30-1.33.ASIA/PACIFIC
China’s yuan slipped after the PBOC lowered its charges on seven-day repo agreements from 2.55% to 2.50%. Chinese authorities control several rates with maturities from 7-days to one-year. China cut its one-year rate on November 5 and the 7-day repo rate over the weekend.
Japan’s yen rebounded after news that China has reservations about current Phase-1 trade deal.