Home Daily Commentaries Risk on as US and China agree to a trade war ceasefire.

Risk on as US and China agree to a trade war ceasefire.

Daily Currency Update

Risk is back on this morning, after the US and China agreed to a temporary truce in the trade war at the G20 in Argentina over the weekend. The US has will shun its plan for 25% tariffs on $200 billion of Chinese imports from 1st January, or any other implementation of trade restrictions for 90 days, just while the respective governments try to solve issues such as forced technology transfer and intellectual property protection. The greenback is broadly weaker as a result, and GBP/USD opened 80 points higher.

The weekend Brexit headlines haven’t had too much of an impact on the pound this morning, which is unusual. The PM now seems to be under pressure from Labour to publish the full legal advice on her Brexit deal. In the meantime, we’ve heard plenty of “what if” theories should the plan not make it through parliament on the 11th December, including suggestions that May will struggle to survive a confidence motion. The DUP seem to be behind this one.

It’s a busy week for market data this week, with UK PMIs due through the early part of the week. Carney and Powell are also due to speak through the early-middle part, and we finish of with US employment data by way of US Non-Farm Payrolls, a notorious lottery figure. The US-China rhetoric will no doubt continue and play a large part in influencing risk appetite, and so - of course – will Brexit headlines, especially so as we get closer to 11th December.

Key Movers

Risk demand gapped higher overnight, in response to the US-China trade ceasefire announced over the weekend. The greenback opens slightly weaker this morning as a result, especially so vs. the commodity currencies.

In other news, oil gained +5% after Russia and Saudi Arabia extended their accord on oil production cuts, the effects of which have been seen mostly in the reaction of USD/CAD.

It’s a heavy data/risk event this week for the USD, with ISM Manufacturing PMI due today, Fed Chair Powell due to testify on Wednesday, another Powel speech on Thursday, and employment data on Friday.


EUR/USD fell towards the 1.13 big figure on Friday, weighed by a generally stronger dollar and a weaker CPI inflation print. However, like most other currencies, the euro gapped higher overnight following news of the US-Sino trade war ceasefire. EUR/USD pushed back through 1.1350 and has been on a steady incline early this morning.


Focus is now shifting to ECB president Draghi as he addresses markets on Wednesday ahead of this month’s ECB policy meeting. A shift in rhetoric and affirmation the ECB will end is QE program this month could help push the EUR/USD pair back through 1.14 and break the recent bearish undertone plaguing the combined unit.


The Australian dollar surged nearly 1% on Monday’s open, touching highs of 0.7392. This follows the temporary truce regarding the US-China trade war, agreed by US president Trump and Chinese President Xi at the G20 in Argentina.

In what is shaping up to be a busy week for the aussie in terms of data releases, the top tier releases include current account numbers, RBA monetary policy decision, closely followed by Wednesdays Q3 GDP read, and Thursday’s October retails sales numbers.


The CAD has bounced higher over the last few trading sessions, buoyed by news of the US-China trade “agreement” and the recovery in oil prices. After trading close to and above 1.3330 on Friday, USD/CAD opens in London at 1.3175.

USD/CAD trader will now focus their attention to the BOC Rate Statement on Wednesday, followed by local and US employment numbers on Friday.


Like most other commodity currencies, we also got a positive reaction to the US-China headlines out of the kiwi overnight. Market moves had been modest in the 24 hours leading into Saturday’s summit as the NZD struggled to extend beyond resistance at 0.6880/0.6890. With little of note on the domestic docket this week, attentions will focus on risk flows leading into GDP and Business Confidence data later this month.

Expected Ranges

  • GBP/USD: 1.2690 - 1.2850 ▼
  • GBP/EUR: 1.1200 - 1.1310 ▼
  • GBP/AUD: 1.7220 - 1.7450 ▼
  • GBP/CAD: 1.6750 - 1.6945 ▼
  • GBP/NZD: 1.8350 - 1.8650 ▼