The lesson from the weekend drama was that deals can come together in a heartbeat and that deep pessimism might be the time to buy. The Canadian dollar was the top performer Monday while the yen lagged. The US September ISM manufacturing survey was at 59.8 compared to 60.0 expected.The RBA decision is up next. A new CAD trade was issued, while the JPY trade was stopped out.

Yesterday Ashraf noted that it wasn’t too late to sell the Canadian dollar and that was the case as the declines continued throughout the trading day as USD/CAD broke the 200-DMA to hit a four-month low late in North American trade. Also note USDCAD is among the most inversely related pairs with equity indices.

The quick turnaround on the NAFTA deal may prove to be a helpful lesson for sterling traders as Brexit negotiations continue. Algos bought GBP heavily on Monday on a newswire headline that gave the impression of May offering something that would likely lead to a deal. Cable instantly jumped a full cent but later gave back nearly all the gains with the text of the report showing that this was a backstop deal contingent on getting full access to the EU; something that’s a longshot. Also watch EURGBP closely for GBP’s Brexit-related reactions rather than only GBPUSD.

- advertisement -

In economic news, IMF leader Lagarde said a downgrade to global growth forecasts would be coming this month.

Italy remains an overhand for the euro as it fell to the lowest in three weeks at 1.1564. We can’t envision a major blowup over 0.4 pp on the deficit-to-GDP target but the Italian bond market certainly hasn’t been impressed.

Perhaps the news that could reverberate the longest was a roughly 3% rise in WTI and Brent crude with both at the highest in four years. India said it won’t import oil from Iran and Japan and South Korea have already made similar announcements.

Looking ahead, the RBA decision is at 0430 GMT (05:30 BST) with no change widely expected. Some economists expect the RBA to hold rates unchanged through 2020 in a sign of the deep complacency that surrounds the central bank.

Previous articleEco Data 10/2/18
Next articleOil’s The Word
Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.