The US dollar finished mixed on Wednesday against major currencies. The EU’s Chief Brexit Negotiator for the EU announced that they are prepared to offer Britain a unique partnership. The news boosted the pound and the euro versus the greenback. The Canadian dollar continues to advance as talks continue for Canada to join the US-Mexico trade deal that is meant to replace NAFTA.
Growth concerns borne out of the rise of trade disputes has been a major factor in market pricing. The softening of some trade turmoils with a willingness to negotiate is sure to impress on central banks that will have a busy month of September.
Canadian Dollar Boosted by Trump-Trudeau Comments
The USD/CAD lost 0.18 percent in the last 24 hours. The currency pair is trading 1.2908 after the optimism on Canada joining the US-Mexico trade agreement. Friday has been set as an arbitrary deadline but comments from US President Trump and Canadian Prime Minister Justin Trudeau have been supportive of reaching an agreement.
The loonie is higher ahead of the monthly release of Canadian GDP data on Thursday. Canadian growth is expected to come in at 0.1 percent which could put some question marks around a possible interest rate hike in September.
The Bank of Canada (BoC) has lifted rates twice in 2018 and the market is pricing in at least another one before the end of the year. The U.S. Federal Reserve is heavily anticipated to hike in September, but the Canadian central bank has an earlier date in the month, and the October meeting could offer better timing.
Pound Higher on Brexit EU Comments and Lower Possibility of Hard Divorce
The GBP/USD rose 1.23 percent on Wednesday. The currency pair is trading at 1.3027 after comments from the EU’s chief negotiator Michel Barnier said the UK could get a unique partnership. The possibility of a hard Brexit has been hanging over the pound and the news of a softer divorce was a breath of fresh air for the currency.
There are a lot of details that remain unknown, and Barnier made it clear that the single market its not negotiable. The GBP rose to above the 1.30 price level where it was last in early August.
US Dollar Fails to Rise on Higher GDP data
Gold prices showed signs of life toward the end of the North American session and its close to levels last seen at the beginning of the trading week. The upward revision in the second estimate of the US GDP to 4.2 percent gave the greenback a boost earlier on Wednesday. Easing of trade tensions with progress on the NAFTA renegotiation and softer Brexit news can be supportive of metals.
The stronger dollar has put downward pressure on the yellow metal, but the surprisingly fast US-Mexico trade agreement is giving hope that American negotiators employ similar tactics with the EU and China.
Crude Prices Higher on Trade Tension Easing and Iran Supply Disruption
The Brexit news boosted the pound and the euro against the greenback. The softness of the dollar is aiding the rise of oil prices after the Energy Information Administration (EIA) published its weekly inventories. Crude stocks fell more than expected on Wednesday by 2.6 million barrels versus the forecasted 1 million barrels.
The API data released yesterday showed a slight increase of 38,000 barrels versus an anticipated drawdown of 1 million barrels.
Oil prices have been under pressure from global growth concerns resulting form trade disputes. The trade agreement between the US and Mexico earlier this week has eased those fears somewhat and the looming sanctions against Iran are beginning to impact oil supply lifting crude prices.
The dollar got a small lift from a higher than expected second GDP estimate, but steady economic growth and more interest rate hikes from the U.S. Federal Reserve are already priced into the currency.
Subscription available on iTunes https://goo.gl/TZEWRW and GooglePlay https://goo.gl/cRBk39. Tune in every Tuesday and don’t miss a beat as we cover the hottest trends impacting the markets in the week ahead. Trading is high risk. Losses can exceed investment.
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
Alfonso Esparza
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Latest posts by Alfonso Esparza (see all)
- Market Rally Still Going Low Holiday Volumes Awaiting Start of 2020 - 27 December 2019
- Market Awaits China Retaliation on Trade - 29 November 2019
- Alibaba to Close Order Book Ahead of Huge IPO - 18 November 2019