USD - United States Dollar
In early October, the next face-to-face talks between U.S. and Chinese officials will take place in Washington, according to the Chinese Ministry of Commerce. The plans were made on a phone call with Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer. The latter's office issued a cautious statement that ministerial-level talks would happen "in the coming weeks." This news was enough to boost market sentiment today given swirling fears over a recession.
The ADP non-farm employment change came in at 195,000 from July to August, versus the expectation for 148,000, according to the August ADP National Employment Report released this morning. However, the U.S. dollar index continues in a free fall, with a contraction of 0.28 percent at the time of this writing.
Yesterday, the Fed released its "beige book," and said that most U.S. businesses remain optimistic despite concerns over the U.S trade war. After listening Fed officials such as Bullard, it seems like they are gearing up to reduce interest rates in two weeks, most likely by a quarter-percentage point. Friday's jobs report and the readings on retail sales and inflation next week will provide us with a more accurate clue.
In the U.K., parliament rejected Boris Johnson's call for an early general election on Oct. 15th, after passing a bill that would force the PM to ask the EU to delay Brexit by three months to Jan 31 if he can't secure a deal or persuade MPs to leave the bloc without one. The next step is the legislation heading to the House of Lords. The GBP/USD pair continues moving in a bullish manner, and the following resistance level is set around 1.2433.
The global equity markets have continued to rise following the positive price action from North America. There were several drivers to be bullish on stocks and commodity currencies (Loonie, Kiwi, and the Aussie dollar); such as Hong Kong's Carrie Lam pulling the extradition bill; reduced chances of a no-deal Brexit; and the Bank of Japan Kataoka's suggestion that the BOJ should take pre-preemptive action on rates. The icing on the cake is the re-pricing of the Fed after yesterday's weak ISM manufacturing in the U.S. and China's cabinet signalling that a reduction in the amount of funds banks have to hold in reserve, which adds to the positive mood in the capital markets.
On the flip side, the Bank of Canada disappointed the doves by saying a degree of monetary policy remains appropriate for now, but they opened the door slightly to a future cut, saying they will continue to pay attention to global developments (i.e. trade conflict) and the impact on the outlook for Canadian growth and inflation.
European Central Bank presidential nominee Christine Lagarde signaled she would follow Draghi's example in finding ways to keep monetary policy exceptionally loose.
1.3173 - 1.3240 ▲EUR/USD:
1.1040 - 1.1093 ▲GBP/USD:
1.2273 - 1.2433 ▲AUD/USD:
0.6789 - 0.6864 ▲NZD/USD:
0.6341 - 0.6411 ▲