Morning Commentary & Currency Insights – September 4, 2018

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As we come back from the long weekend, trade tensions are front and center as negotiations with China continue to deteriorate a new North American trade deal has yet to be reached by the North American counterparts. The Dollar rose across the board this morning as trade concerns between China and the US continue to bubble with Trump looking to impose as much as $200B worth of tariffs on Chinese imports. The public comment period ends later this week, and after that there is no knowing how swiftly tariffs of that magnitude can be imposed. The Dollar also got a boost after Friday’s NAFTA deadline came and went without a deal being reached. All parties involved appear to be hopeful that a deal can be reached soon. The BoC will announce a rate decision tomorrow, with markets pricing in only a 17% chance of a hike. Primary concerns revolve around global trade, specifically with Canada’s Southern neighbors.

EUR is down this morning as a result of Dollar strength. The Pound has also been pressured lower by the Dollar and the continued fear of a no-deal Brexit.

In a shortened week, we’ve got some action on the calendar with Canadian RBC Manufacturing PMI and US ISM manufacturing/Employment numbers this morning, Wednesday’s BoC Rate Decision and Friday we’ll see dual jobs numbers out of North America. Short term support and resistance is 1.3105 and 1.3235 respectively, with RSI at 58 and the 200-day moving average residing at 1.2850.

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