Daily Currency Update

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Phase One of the US-China Trade Agreement Introduced

USD - United States Dollar

Following the Fed announcement to hold interest rates at 1.75% last week, Chair Jerome Powell said at a news conference, "…both the economy and monetary policy right now are in a good place." The Fed signaled it would keep interest rates on hold through 2020, as long as the economic outlook doesn't change. Part of the FOMC statement that summarizes the Fed's message was, "The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2% objective". The U.S. dollar declined, while U.S. stocks edged higher. The relationship between the price of the U.S. dollar and U.S. stock prices have been very irregular this year. Gross Domestic Price Index/GDP for the U.S. will be released on Friday this week the Q3 QoQ number is the most significant economic fundamental released this week
Phase one of the US-China trade deal was announced Friday, and equity markets globally are going green. Market Participants digest the Phase One trade deal, which will nearly double U.S. exports to China over the next two years. Shanghai closed up 0.6% and the Euro Stoxx 50 up 0.8%, the S&P 500 and Nasdaq futures are pointing 0.4% higher, while the Dow is tracking 68 points higher at the open. In the U.K., the FTSE advanced 2% higher for a second session on reduced uncertainty as Prime Minister Boris Johnson eyes a parliament vote before Christmas to "get Brexit done."
WTI Crude hit $60 a barrel for the first time since September on Friday. The U.S. oil futures benchmark was lifted last week by the signing of a partial trade deal between the U.S. and China, as well as a surprisingly deep round of output cuts by the Organisation of Petroleum Exporting Countries (OPEC) and its allies.

Key Movers

Boris Johnson's Brexit election gamble paid off spectacularly last Friday as the U.K. Conservative Party secured a crushing victory. They won their most significant majority in Westminster since 1987, while the U.K. Labour Party posted their worst performance since 1935, which led Jeremy Corbyn to state that he would not lead Labour into the next General Election. The GBP rallied immediately after the exit polls predicted a vast Conservative majority, reaching the critical 1.35 level, and then closing the week around 1.3350, still a 9-month high.
Christine Lagarde set out her vision for the ECB after her first rate-setting meeting as President, where she committed to following her predecessor's vision of an ultra-loose policy while giving a more upbeat economic tone. She committed to negative interest rates and the current quantitative easing program that the ECB has restarted again. She did, however, reject fears that the eurozone could slide into a prolonged period of stubbornly low rates, growth, and inflation.

Expected Ranges

EUR/USD: 1.1122 - 1.1155 ▲

GBP/USD: 1.3322 - 1.3422 ▼

USD/CAD: 1.3114 - 1.3188 ▼

AUD/USD: 0.6868 - 0.6898 ▲

NZD/USD: 0.6587 - 0.6615 ▲