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The US dollar was lower against most major pairs on Friday. The greenback dropped as investors flocked to safe havens away from the US currency. Trade war concerns and its impact on US companies have triggered a massive sell off in equities. The US dollar is on the back foot despite strong growth as evidenced by the release of the flash GDP for the third quarter that showed a 3.5 percent gain beating expectations.

The end of October and the start of November bring a packed weekly economic calendar. Central bank action and employment data will guide markets that are still sensible to geopolitics.

  • Bank of Japan to avoid Halloween surprise
  • Bank of England to keep monetary policy on hold until Brexit clarity
  • US economy expected to have added 200,000 jobs in October

Euro to Underperform as Italian Budget Drama Continues

The EUR/USD lost 0.93 percent in the last five trading sessions. The single pair is priced at 1.1406 after a strong Friday saw funds exit the US dollar to look for safety elsewhere. European fundamentals make this a short term strategy as Italian budget concerns with neither side backing down, and the ongoing saga of Brexit negotiations are major headwinds for the currency.


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Fears of an economic slowdown in the US proved to be premature, but investors worry that the boost from Trump tax cuts is evaporating. Stocks have been vulnerable as the U.S. Federal Reserve stands firm on its plans to hike one more time this year and three or four in 2019 on its path to rate normalization. US-China relations have not improved and earning reports have started to reflect the impact of tariffs on China.

The growth gap between US and Europe continues to widen, but for the most part has been already priced into the EUR/USD. The political situation where the European Council is opening too many fronts is a concerns for investors. Italy and the United Kingdom are asking for too much in the views of the EC, but it seems there is no clear middle ground in Italian budget negotiations or the trade deal after Brexit.

Brexit top of Mind for Sterling with BoE and Autumn Budget

The GBP/USD lost 1.97 percent during the week. Sterling is trading at 1.2832 versus the dollar. The equity market sell off did help the pound gain 0.11 percent on Friday. The risk event calendar in England is stacked with the Autumn Budget on Monday and the Bank of England (BoE) super Thursday not to mention the ongoing Brexit negotiations.


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The lack of progress in the short term on Brexit will keep the BoE from making any changes to its monetary policy. A no-deal scenario is still very much alive and will limit what Governor Carney can propose, until those unknowns are sorted. The next rate hike in the UK could come until summer of 2019.

Stock Sell Off Puts Loonie Back in Defensive Mode

The Canadian dollar was the only major currency to not advance on the weakened dollar. The loonie lost 0.17 percent on Friday and with that would give back most of the gains earlier in the week and only end up 0.13 percent ahead of the greenback.


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The Bank of Canada (BoC) delivered an expected 25 basis points rate lift on Wednesday, putting the currency pair near the 1.30 price level, but a combination of risk aversion and strong US data combined to once again put the loonie over 1.31 ahead of next week.

Employment data in the US and Canada will be the highlight for the pair. The US is forecasted to keep its steady pace of growth with employment its biggest pillar. The US could gain more than 200,000 jobs and wages see a rise of 0.2 percent, validating the Fed’s tightening policy and push the greenback higher.

Canadian jobs will prove crucial as the BoC was more hawkish than anticipated at its press conference following the rate hike announcement. Monthly GDP and raw material prices on Wednesday will precede the jobs announcement and together they will paint a clearer picture on the economy.

Oil Losses for Third Straight Week

Crude prices were higher on Friday but continue to fall as supply anxiety with conflicting Saudi Arabia comments and downward pressure from lower growth forecasts around the globe.


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The equity market sell off also dictated the direction for oil to follow. Organization of the Petroleum Exporting Countries (OPEC) and other major producers are starting to worry about over supply as their production cut agreement is coming to and end, but as the same time global energy demand might be on the decline.

Gold Rises as Safe Haven Appeal Persists

Gold rose 0.28 on Friday as the stock market sell off hit the US dollar. US fundamentals continue to show a strong economy, but investors are still anxious about falling stocks and headed towards the safety of gold.


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Gold has recouped its place as a safe haven after six months of losses. The Fed’s monetary policy and trade disputes have made stock markets drop and with investors liquidating long positions they have chosen the yellow metal as a destination. November if full of geopolitical risk events with US midterms, Italian budget and Brexit all in the agenda. Gold is expected to benefit from rising uncertainty, but is sensitive to a correction once the dust has settled.

Market events to watch this week:

Monday, October 29 8:30am USD Core Personal Consumption Expenditure

Tuesday, October 30

6:00am EUR Flash EU Gross Domestic Product 10:00am USD CB Consumer Confidence 8:30pm AUD CPI q/q Tentative JPY BOJ Policy Rate Tentative JPY Monetary Policy Statement Tentative JPY BOJ Outlook Report

Wednesday, October 31

Tentative JPY BOJ Press Conference 6:00am EUR Flash EU CPI 8:15am USD ADP Non-Farm Employment Change 8:30am CAD GDP m/m

Thursday, November 1

5:30am GBP Manufacturing PMI 8:00am GBP BOE Inflation Report 8:00am GBP MPC Official Bank Rate Votes 8:00am GBP Monetary Policy Summary 8:00am GBP Official Bank Rate 8:30am GBP BOE Gov Carney Speaks 10:00am USD ISM Manufacturing PMI 8:00pm NZD ANZ Business Confidence 8:30pm AUD Retail Sales m/m

Friday, November 2

8:30am CAD Employment Change 8:30am CAD Trade Balance 8:30am CAD Unemployment Rate

8:30am USD Average Hourly Earnings m/m

8:30am USD Non-Farm Employment Change

8:30am USD Unemployment Rate

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The US dollar was higher against major pairs on Thursday. The greenback is near 2018 highs as risk aversion has made the currency a preferred safe haven destination. The US stock market rebounded with a 3 percent rise as buyers went back into the market stoping the decline that wiped out this year’s gains.

The US GDP first estimate for third quarter will be released on Friday, October 26 at 8:30 am. Economists are forecasting a 3.3 percent gain. Geopolitical uncertainty and rate differentials will continue to weigh on markets. The ECB did not provide any further guidance and did not properly address the rising headwinds facing Europe.

  • US Growth lower than last quarter but still ahead of other major economies
  • US GDP price index forecasted at 2.1 percent
  • US yields remain near 3.12 percent

Euro Lower Despite ECB Sticking to End QE

The EUR/USD lost 0.16 percent on Thursday. The single currency is trading at 1.1373 after European Central Bank (ECB) President Mario Draghi pledged to continue its tightening policy. The ECB chief once again had a negative effect on the currency. As Draghi continued his press conference he highlighted the headwinds facing Europe, but the market does not share the optimism of the central bank.


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With the upcoming mid-term elections in the US the first estimate of the Gross Domestic Product (GDP) for the third quarter rises in importance. A strong reading is expected given the US economy has kept up the rate of recovery. The market is pricing in a 3 percent rise, but a higher growth rate is possible with political and economic implications.

The US economy appears to have slowdown from last quarter but even Fed Banks are torn on where the data point will come in. New York Fed estimates a 2.13 percent rise and the Atlanta Fed at 3.6 percent. This being the first release it is subject to further revisions, but they usually don’t have the same impact as the advance data.

Market events to watch this week:

Friday, October 26
8:30am USD Advance GDP q/q

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

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The US dollar is lower across the board on Tuesday. The market is navigating a perfect storm as the stock rally hit a speed bump at the same time geopolitical risk is on the rise. Multiple elections around the globe and trade concerns between big economies (China-US, EU and UK) have triggered risk aversion. Asset classes that had lost their safe haven appeal are back. Gold is having a moment as even the USD is not the final destination. Investors are dialling back their risk appetite and pulling out of stocks, flocking to traditional safe haven assets. 

The Bank of Canada (BoC) will publish its benchmark rate on Wednesday, October 25 at 10:00 am EDT and will host a press conference with Governor Stephen Poloz at 11:15 am EDT.

– BoC expected to hike interest rate to 1.75% – API crude inventory points to a buildup, but weather could play a factor

– Fed speakers to boost US dollar

Loonie Flat Awaiting BoC Rate Decision and Poloz Speech

The USD/CAD lost 0.10 percent on Tuesday. The currency pair is trading at 1.3086 ahead of the Bank of Canada (BoC) rate announcement. The central bank is highly anticipated to lift interest rates to 1.75 percent. The move is for the most part priced into the loonie, but the press conference by Governor Stephen Poloz is what investors will be focusing on. The expectation is for a dovish hike, rising rates while at the same time highlighting the major headwinds facing the Canadian economy.


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Inflation and retail sales disappointed, but still showed enough momentum behind the economy to validate a higher benchmark rate. The biggest factor keeping the BoC awake at night was the uncertain fate of NAFTA. Teh signing of the USMCA has taken that away, although ratification is still six months away.

The loonie is slightly higher ahead of the BoC, with risk appetite subdued as the global stock market sell off has safe havens bid. Geopolitics continue to be a major factor with currencies reflecting the market sentiment.

Euro Higher as US dollar Loses Footing

The EUR/USD is flat on Tuesday, but has accumulated 0.34 percent in losses this week. The single currency is trading at 1.1474 as the Italian budget continues to put downward pressure on the currency. The European commission has rejected the 2019 budget proposed by Italy with a three week period to submit a new one.

Italian politicians are sticking to their guns and the showdown between Rome and Brussels shows no sign of a reaching a middle ground.


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The European Central Bank (ECB) will publish its monetary policy decision on Thursday, with no changes expected. The central bank is set to start hiking rates next summer, but higher spending from Italy could derail those plans.

GBP Rebounds on Irish Backstop Alternative

Sterling is higher against the US dollar on Tuesday, but continues to be under pressure raking up a 0.59 percent loss this week as Brexit turmoil puts pressure on the pound.

Risk aversion has made investors seek the safety of gold, the Japanese yen and the Swiss franc. Political uncertainty around PM Theresa May has also done the currency no favours.


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The lockdown on the Irish border received some good news as the EU could offer a UK wide customs union and avoid a hard border between Northern Ireland and the Republic.

So far positive rhetoric has pushed the currency higher, but lack of details is a concern as being 90 or 95 percent close to a deal during a speech is not the same as being close to signing an agreement. The market is expecting details sooner rather than later as the deadline is fast approaching and without a backstop there can be no trade deal.

Oil Lower as Saudi Arabia Pledges to Close Production Gap

Oil is trading lower on Tuesday. West Texas Intermediate lost 4.56 percent as the Saudi Arabia investment conference drew to a close. Energy prices recorded a the biggest daily loss in three months as rising global growth concerns hit stock markets and demand for crude going forward.


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Saudi Arabia has pledge it will increase production to keep prices stable and concerns of negative backlash following the killing of journalist Jamal Khashoggi have eased.

US sanctions against Iranian exports are providing some support but downward pressure has been more persistent. The release of the US weekly crude inventories published by the Energy Information Administration (EIA) on Wednesday could tip the balance, although the market has been pricing in a drawdown due to minor weather disruptions.


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Geopolitics directly affecting the supply of oil was a big factor in October, but it now seems Saudi Arabia will increase production as much as possible sending energy prices lower.

Gold Higher on Safe Haven Demand

Gold rose 0.76 percent on Tuesday. The yellow metal was supported by a soft dollar and the stock market fall.

The market is in a perfect storm as the stock rally hit a speed bump at the same time geopolitical risk is on the rise. Multiple elections around the globe and trade concerns between big economies (China-US, EU and UK).


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Investors are pulling back as stock market sell off has been the trigger. Asset classes that had lost their safe haven appeal are back. Gold is having a moment as even the USD is not the final destination. Investors are dialling back their risk appetite and pulling out of stocks, flocking to traditional safe haven assets. 

The Trump tax cut boost is starting to fade and is being replaced by trade concerns are starting to hit companies. Caterpillar is citing rising costs and has underperformed. There is little hope the US-China trade dispute will end as quickly as the USMCA was signed. 

The last quarter of 2018 will be packed with market events as central banks are expected to close out the year with major policy decisions and big political events (US midterms, Italian budget, Brazil elections, etc) 

Market events to watch this week:

Wednesday, October 24 10:00am CAD BOC Monetary Policy Report 10:00am CAD BOC Rate Statement 10:00am CAD Overnight Rate 11:15am CAD BOC Press Conference

Thursday, October 25

7:45am EUR Main Refinancing Rate 8:30am EUR ECB Press Conference 8:30am USD Core Durable Goods Orders m/m

Friday, October 26

8:30am USD Advance GDP q/q

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

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The US dollar is mixed on Friday. Investor’s appetite for risk rose and safe haven currencies (JPY and CHF) fell while positive China and Brexit news saw the NZD, EUR, GBP and AUD advance against the USD. The Canadian dollar was dragged down in the last trading day of the week after softer than expected retail sales and inflation data. Next week’s Bank of Canada (BoC) monetary policy meeting is anticipated to bring a 25 basis point rate hike. Despite the miss inflation has been above the central bank’s target and businesses are optimistic about strong sales.

  • BoC expected to hike interest rate to 1.75%
  • German Business Climate to cool down
  • US first estimate of Q3 GDP to confirm solid growth

Euro Caught Between Brexit and Italian Budget

The EUR/USD fell 0.41 percent in the last five days. The single currency is trading at 1.1510 after rising on Friday due to a combination of softer US housing data and positive Brexit News. The gradual pace of rate lifts by the U.S. Federal Reserve had a negative impact on previously owned homes in September.


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The euro rallied on Friday after a report that Theresa May’s government is ready to drop the time limit demand on the Irish border. The EU and the UK are said to be close to a deal, 90 percent by the estimate of the EU’s top negotiator, but the final 10 has proven hard to agree on.

Italian budget issues continue to drag on the euro. The threat of a downgrade of Italian debt does not seem to faze local politicians that are ready to square off against Brussels.

The European Central Bank (ECB) will publish its main refinancing rate and host a press conference on Thursday, October 25. No changes are expected, but investors need to be aware of the tone of the press conference as Mario Draghi could push a more dovish rhetoric.

Loonie to get BoC Rate Hike Boost

The USD/CAD fell 0.74 percent in a weekly basis. The currency pair is trading at 1.3117 and will look at the Bank of Canada (BoC) for support. The central bank is highly anticipated to announce a 25 basis points interest rate hike. The central bank has lifted rates twice in 2018 and rising inflation is forcing the hand of the BoC.


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The rate decision has been priced in for some time, but the fundamental picture has worsened reducing the probabilities of a rate hike while still at near 80 percent. The NAFTA renegotiation was a big risk keeping the BoC awake at night, and with the USMCA some of that risk is lifted.

With inflation data lower than forecasted it now validates the gradual approach of the BoC and unless there is hawkish rhetoric from Governor Poloz, the loonie will continue to underperform against the USD.

Oil Drops as US Weekly Buildup Pressures Prices

West Texas Intermediate lost 0.95 percent this week. WTI is trading at $69.36 after staring a rebound on Friday due to surging Chinese demand. Supply concerns continue to guide daily price action. The US weekly inventories showed a buildup last week and pushed prices lower. Iranian exports have been cut ahead of the start of US sanctions, but there are reports that OPEC and other major producers are already closing the gap.


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Saudi Arabia is embroiled in a diplomatic scandal and is quickly losing the goodwill it gained for having engineered price stability with the production cut agreement. The OPEC and major producers agreed to limit output to stop the free fall in energy prices and have extended the agreement to this year.

Trade war concerns eased on Friday as China and the US have agreed to meet during the sidelines of the G20 meeting in Buenos Aires. The leaders of the two nations will fly in a day ahead of the event to try and mend the trade relationship.

Gold Rises for Third Week Straight

Gold rose 0.6 percent last week. The yellow metal is trading at $1,229.40 despite gradual rate hike talk by Fed members and the minutes form the September FOMC. The rebound of the stock market correlated with the rise of the yellow metal. Safe haven appetite in gold holdings has returned and in a market with no shortage of geopolitical risk for the remainder of the year the yellow metal is set to continue on its rise.


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Market events to watch this week:

Wednesday, October 24 10:00am CAD BOC Monetary Policy Report 10:00am CAD BOC Rate Statement 10:00am CAD Overnight Rate 11:15am CAD BOC Press Conference

Thursday, October 25

7:45am EUR Main Refinancing Rate 8:30am EUR ECB Press Conference 8:30am USD Core Durable Goods Orders m/m

Friday, October 26

8:30am USD Advance GDP q/q

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

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The Canadian dollar fell against the US dollar on Friday despite a rebound in Canadian employment numbers and a miss in their American counterparts.

The loonie did advance against the greenback when the NFP report and the Canadian employment numbers were announced but as traders looked ahead to the long weekend they reduced their short US dollar exposures.


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Canada added 63,300 positions in September driven by part time employment. The gain offset last month’s losses of 54,100 jobs that were also part time positions. The Bank of Canada (BoC) will have another solid datapoint to validate its upcoming monetary policy meeting that is being priced in at 85 percent probability of a rate hike.

The Canadian dollar is on track to end 0.29 percent lower versus the US dollar. Despite the headline jobs miss on the NFP report, the revisions and more importantly the inflation components still support a Fed rate hike in December. The CME’s FedWatch tool shows a 81.7 percent probability, down slightly from 83.3 percent yesterday.

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The US dollar is higher across the board versus major pairs ahead of the U.S. non farm payrolls (NFP) on Friday. The release of private payrolls on Wednesday at 230,000 jobs in September beat the market forecast of 185,000 positions. The NFP is expected to show a gain of 190,000 jobs when it is published on Friday, October 5 at 8:30 am EDT.

The U.S. Federal Reserve raised interest rates last week and strong fundamental data is putting the odds of a December rate hike at 83.3 percent as per the CME’s FedWatch tool. A strong jobs headline and more importantly a solid gain in hourly earnings will make a stronger case for a December rate hike.

  • NFP expected to show a gain of 190,000 jobs in August
  • Average hourly earnings forecasted to rise by 0.3 percent
  • Canadian jobs to rebound with a 25,000 position gain

Dollar Awaits Jobs Report

The EUR/USD is down 0.74 percent this week. The single currency is trading at 1.1517 before the release of the NFP jobs report. Fundamental data in the US has supported the USD at the same time that economic indicators have softened in Europe in tandem with rising concerns about the Italian budget.

Fed Chair Powell’s speech and press conference after the FOMC was a big factor in the rise of the dollar after the market had already priced in the 25 basis points lift to interest rates.


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Chair Powell spoke on Wednesday and put forth a gradual rate hike path as the US economy continues to march onwards.

The monetary policy divergence between the Fed and other major central banks was clear last week as fundamentals back the US policy makers who will keep tightening, while questions remain on how effective other monetary policies around the world have been.

The euro regained some ground on Thursday, but investors will await the release of the US jobs report and if solid inflation signals appear will put the single currency under pressure.

Canadian Dollar Lower But Still Shielded by USMCA

The Canadian dollar fell on Thursday as the NFP report approaches. The ADP private payroll report beat the forecast on Wednesday and with it a strong probability of a December rate hike by the Fed.

The loonie is nearly flat on weekly trading as all the gains from the USMCA announcement are gone. The strong monthly GDP last Friday and the USMCA announced on Monday are still shielding the loonie from further loses.


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The monthly Canadian GDP data released last week is driving higher expectations of a interest rate lift in October.

The Bank of Canada (BoC) held rates in September ahead of a highly anticipated Fed rate lift that came to pass.

The US central bank has forecasted another rate hike in 2018 and 2 or 3 more next year as part of its economic projections published Wednesday.

BoC Governor Stephen Poloz spoke last week addressing the rising inflation and Friday’s GDP data point puts a rate hike firmly on the table in the short term.

Employment data on Friday will give insight into what the next steps are for the BoC. The NFP will steal most of the spotlight but CAD traders will be expecting a recovery from last month where the economy lost 51,600 jobs.

The losses came mostly in part time positions, but investors will look for signs of wage growth as a positive and to validate the central bank lifting rates later this month.

Oil Tumbles After Rumors of Increased Supply from Saudi Arabia and Russia

Oil prices fell on Thursday after investors took profits on the latest rally.

The biggest factor impacting energy markets is the looming sanctions against Iranian exports. The Iranian supply disruption offset the large inventory data point on Wednesday. Reports of Saudi Arabia and Russia ramping up production to cover the shortfall in supply took energy prices lower.


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The drop in supply has kept prices higher with all eyes on Saudi Arabia waiting for signs a production increase after US President Donald Trump has called out the OPEC to do something to bring prices down.

Gold Pressured by Strong Dollar

Gold lost on Thursday, but is still higher on a weekly basis.

The anticipation for the NFP report on Friday could point to another interest rate hike and further pressure the yellow metal.

The Fed raised the benchmark rate by 25 basis points and the futures market is pricing in a 78.5 percent probability of a lift in December.

Friday’s U.S. non farm payrolls (NFP) will be the final test of the yellow metal.


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The US is expected to add 190,000 jobs with average hourly earning rising 0.3 percent.

Higher inflation expectations validate the Fed’s forecasts and the market is pricing in a rate hike in December and follow ups in 2019.

Market events to watch this week:

Friday, October 5 8:30am CAD Employment Change 8:30am CAD Trade Balance 8:30am USD Average Hourly Earnings m/m

8:30am USD Non-Farm Employment Change

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

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The US dollar is mixed against major pairs on Friday. The dollar gained against the JPY, EUR, GBP and CHF but depreciated against the commodity pairs (CAD, AUD and NZD).

Fundamental data in the US supported the dollar: the Fed delivered its anticipated third rate hike of 2018, the final GDP for the second quarter was 4.2 percent. Fed Chair Powell’s speech and press conference after the FOMC was a big factor in the rise of the dollar after the market had already priced in the 25 basis points lift to interest rates. Mr Powell will speak next week on Tuesday, October 2nd on the topic of employment and inflation. This will officially kick off jobs week in the US.

The main event will be the release of the biggest economic indicator on Friday, October 5 at 8:30 am when the U.S. non farm payrolls (NFP) is published.

  • US manufacturing and service PMIs could signal growth slowdown
  • UK leading indicators expected to remain flat
  • US NFP report to show economy added 190,000 jobs

Euro Hit by Political Turmoil and Inflation Softness

The EUR/USD lost 0.26 percent on Friday. The single currency is trading at 1.1610 and accumulated 1.16 percent in losses during the week. A higher than predicted Italian budget for 2019 at 2.4 percent and softer core inflation in the eurozone put downward pressure on the currency.


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European stock markets were hit by the news as political turmoil once again threatens the European Union.

The other shoe dropped when inflation slowed down in the Eurozone in the same week that the U.S. Federal Reserve hiked rates and was optimistic about economic growth in the US.

The monetary policy divergence between the Fed and other major central banks was clear this week as fundamentals back the US policy makers, while questions remain on how effective other policy makers around the world have been.

Loonie Rises as GDP Data Validates October Rate Hike

The Canadian dollar rose on Friday after the monthly gross domestic product (GDP) beat the forecast with a 0.2 percent gain. The loonie is up almost 1 percent on the final day of the trading week. The currency is still showing a weekly loss against the greenback as NAFTA uncertainty and the U.S. Federal Reserve rate announcement put downward pressure.

The rise today comes with higher expectations of a Canadian interest rate lift in October. The Bank of Canada (BoC) held rates in September ahead of a highly anticipated Fed rate hike in September that came to pass. The US central bank has forecasted another rate hike in 2018 and 2 or 3 more next year as part of its economic projections published Wednesday.


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BoC Governor Stephen Poloz spoke on Thursday addressing the rising inflation and Friday’s GDP data point puts a rate hike firmly on the table in the short term.

NAFTA negotiations have not made big inroads as the US met with Canada with the goal of turning two bilateral agreements into a trilateral one.

With a considerable amount of work still to be done in bridging the gap between US and Canada, the US-Mexico agreement will be published tonight with a possibility of leaving the door open for Canada to join.

It is that possibility that has kept the loonie gaining despite the NAFTA train moving without Canada.

Crude Surges as Supply Concerns Push Prices to 4 Year Highs

Oil prices surged on Friday as supply concerns took crude to four year highs. The news that China is cutting back on Iranian oil purchases triggered a rally where Brent and WTI had a 1.40 percent one-day gain. Brent is on track to a 5.34 percent gain during the week with WTI clocking in at 3.66 percent.

The US sanctions against Iran don’t kick into effect until November, but the harsh penalties threatened against those who do have made Iranian crude purchases drop.


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China’s Sinopec Corp is slashing its loadings in half to avoid the wrath of Washington. In August Sinopec planned to offer Tehran a lifeline by circumventing the sanctions as it reduced US oil purchases due to the rising trade turmoil between the US and China.

The decision by the Chinese state owned energy company will deal a huge blow to Iran as China is its biggest customer.


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The shortfall from Iranian crude sales does not have a short term solution after US Energy Secretary Rick Perry said earlier this week that the US would not tap into its emergency crude reserves to bring prices down.

US President Donald Trump had implied during his UN General Assembly speech that unless the OPEC increase production levels America’s would utilize its position as the largest energy producer in the world.

Gold Gains But US Dollar to Limit Recovery

Gold rose 0.67 percent on Friday but the strength of the US dollar after the U.S. Federal Reserve lifted interest rates this week proved to be too much for the yellow metal that will end up losing 0.49 percent on a weekly basis.

The Fed raised the benchmark rate by 25 basis points and the futures market is pricing in a 78.5 percent probability of a lift in December. Gold traders will look ahead at next week’s manufacturing and service PMIs for more guidance as the US economy continues to grow. Friday’s U.S. non farm payrolls (NFP) will be the final test of the yellow metal.


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The US is expected to add 190,000 jobs with average hourly earning rising 0.3 percent. Higher inflation expectations validate the Fed’s forecasts and the market is pricing in a rate hike in December and follow ups in 2019.

Market events to watch this week:

Monday, October 1 4:30am GBP Manufacturing PMI 10:00am USD ISM Manufacturing PMI

Tuesday, October 2

12:30am AUD Cash Rate 12:30am AUD RBA Rate Statement 4:30am GBP Construction PMI 12:45pm USD Fed Chair Powell Speaks

Wednesday, October 3

4:30am GBP Services PMI 8:15am USD ADP Non-Farm Employment Change 10:00am USD ISM Non-Manufacturing PMI 10:30am USD Crude Oil Inventories

Thursday, October 4

9:30pm AUD Retail Sales m/m

Friday, October 5

8:30am CAD Employment Change 8:30am CAD Trade Balance 8:30am USD Average Hourly Earnings m/m

8:30am USD Non-Farm Employment Change

*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar

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The Mexican peso fell on Thursday on the back of oil losses that were triggered by comments from US President Donald Trump. Oil fell after Trump targeted the Organization of the Petroleum Exporting Countries (OPEC) for not doing enough to keep crude prices low.

This comes ahead of the organization’s meeting in Algeria with other major producers. The production cut agreement has been the most important factor in the stabilization of crude prices since the 2014 drop. Supply disruptions have kept prices in current ranges even as the OPEC and partners such as Russia will be discussing ramping up production.


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Mexico joined the efforts led by Saudi Arabia and Russia to stabilize the oil market by curbing production. The tweet by President Trump indirectly affects OPEC’s partners like Mexico and Russia.

NAFTA talks continue today between the US and Canada with both sides remain optimistic but an agreement does not seem to be in the cards in the short term. Canada is facing pressure from the US and Mexico as both have political timelines that have to be met to insure a quick approval. Canadian Foreign Affairs Minister Chrysta Freeland remains committed to get the best deal for Canada and after 13 months of negotiation will not compromise for the sake of a quick deal.

NAFTA hopes are keeping the peso immune from emerging market contagion, but as US-Canada negotiations drag on, that protection will begin to wear off.

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OANDA Senior Market Analyst Alfonso Esparza reviews the major upcoming market news, macro analysis and economic indicator releases that will impact currencies, stocks other asset classes.

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The dollar bounced back on Friday, after a couple of economic indicator misses last week, the greenback ended higher against all major pairs but was back under pressure on Monday.

A slowdown in the pace of inflation, miss in retail sales expectations and a softer tone on trade from the Trump administration are the three major factors for the softness of the currency.

Interest Rate differentials are a positive factor for the the US Dollar but haven’t done enough to counter the trade war fatigue setting in.

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The Canadian dollar fell on Friday. After the Trump administration softened its stance on international trade, in particular by reopening trade talks with China, NAFTA optimism boosted the loonie. Traders did not feel confident in carrying over short dollar positions into the weekend and the greenback saw a recovery on Friday.


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The loonie advanced 1 percent during the week and next week’s inflation and retail sales data on Friday are crucial for the fate of a Bank of Canada (BoC) interest rate hike. NAFTA headlines will roll in as the team of negotiations get back to work with the aim to add Canada to to US-Mexico agreement.

Expectations are mixed on NAFTA, as Canada seems ready to make concessions on dairy but the US and Mexico continue to press for a trilateral deal while also adding they are ready to forge ahead if its only a bilateral one.

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