Forex markets varied amid uncertainty in US trade relations
Trade negotiations are still a factor in market movements as there are still doubts about how Canada will respond to the clear agreement between the United States and Mexico. Canada’s failure to agree to the new terms reached in a bilateral agreement between the United States and Mexico may mean an increase in exports such as cars. The suggestions are that Canada may be willing to compromise to be part of a new deal. Time is a factor however, with mid-term Congress in November and 90 days for Congress to consult on any resolution to resolve NAFTA. Later, global markets are on hold, as the impact could have consequences for other business deals, especially China. The Dollar continued to decline yesterday, as the market seems cautiously optimistic, but this movement removes some losses early in the day. Any positive result of risk should be positive for stocks and negative dollars, however, how the market looks at the complexities of a deal can be a factor in the final dollar move. It was interesting to see Treasury yields moving higher yesterday, as they headed towards the longer end of the curve as well (although some of this could be attributed to the highest levels in several years of US consumer confidence). Despite the return of the returns this morning, we expect this to continue if Canada comes in. A second look at the growth figures in the US in the second quarter of this year may provide distraction, but the focus remains largely on US business relations.
Wall Street closed higher overnight (S & P 500 +1 tick at 2897) and with higher overnight futures there was a supportive bias for Asian trading (Nikkei + 0.2%). European markets were also supported in today’s early moves. In Forex, there is a very moderate rebound in the dollar (but this is also the case for yesterday’s early moves too), and it is interesting to see a decline in the Australian dollar as the Chinese yuan also weakened initially today. It is also important that the Canadian dollar be the high commissioner in early moves based on proposals that Canada may be about to make concessions on trade negotiations. In commodities, gold swirls around the level of $ 1, with the consolidation of oil.