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USD – United States Dollar
It is quiet on the macro front today with no releases in the U.S. scheduled. The U.S. dollar took direction mostly from offshore events, which saw weakness on the dollar index, which closed at 97.14, a level not seen since early August. Traders remained cautious after Chinese GDP data showed the negative impact the US-China trade war has had on China. We were predicting a slowdown of GDP in Q3 from 6.2 percent to 6.1 percent year-on-year with the actual number contracting further to 6.0 percent as additional tariffs put a leash on growth. The US-China trade war is hampering the economy, with exports contracting 0.4% as the U.S. began imposing an additional 15% tariff on $110 billion worth of consumer goods from September 1st. Imports declined by 6.5% for the quarter. EUR/USD rallied to a near two-month high of 1.1169 while the USD/JPY cross-rate dropped to 108.38.
Boris Johnson has sent an unsigned letter to the EU formally requesting for an extension of the Brexit deadline to end of January 2020 after the parliament voted in favor of the Letwin amendment on Saturday. Sterling dropped initially at the open as the market begins to digest the weekend Brexit news. As the pound trades through the European session, pound strength has been seen as an agreement that is still being favored for the October 31st deadline. Despite losing the vote on Saturday, Boris Johnson’s deal is not entirely defeated as they are set to vote again on it early this week.
Hedge funds have reversed gold long positions as global anxieties begin to recede. With trade tensions easing between the US-China, and the improved negotiations between the UK-EU looked likely to lead to a Brexit deal. Hedge funds have been trimming their long positions in futures and options last week (as of October 15th) to its lowest level since July.
EUR/USD: 1.1149 – 1.1161 ▼
GBP/USD: 1.2875 – 1.3012 ▲
USD/CAD: 1.3098 -1.3138 ▼
AUD/USD: 0.6840 – 0.6880 ▲
NZD/USD: 0.6370 – 0.6416 ▼
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