The Loonie jumps strongly this morning amid a US – China truce and a 6 percent bounce in crude.

Key Movers

The US dollar index decreases 0.16 percent this morning amid the rally in risk assets triggered by a ceasefire in U.S.-China trade. The US and China have agreed to a temporary 90-day truce, much to the delight of risk assets. The size of Monday’s rebound of risk assets itself demonstrates just how dangerous the confrontation is between the U.S. and China for the global economy. After a few bumpy months, we were due for a relief rally, and the trade news is helping to fuel it.



In an early-morning tweet on Monday, Mr. Trump said China had agreed to cut tariffs on American cars from the current 40 percent, apparently signaling Beijing’s readiness to make concessions to prevent further escalating trade tensions.


The EUR/USD is slightly up this morning, keeping its price action above the 1.1300 handle. Like most other currencies, the Euro gapped higher overnight following news of the US-China trade war ceasefire. EUR/USD tested 1.1380 overnight and has been on a slight decline this morning.




The focus is now shifting to ECB president Draghi as he addresses markets on Wednesday ahead of this month’s ECB policy meeting. There is a shift in rhetoric and affirmation that the ECB will end its QE program this month, which could help push the EUR/USD pair back through 1.1400 and break the recent bearish undertone plaguing the combined unit.


The risk is back on this morning after the US and China agreed to a temporary truce in the trade war at the G20 in Argentina over the weekend. The Greenback is broadly weaker as a result; however, the GBP/USD is trading 42 basis points lower this morning at 1.2705. The weekend Brexit headlines seem to be having an impact this morning. The PM now appears to be under pressure from Labour to publish the full legal advice on her Brexit deal. In the meantime, we’ve heard plenty of “what if” theories should the plan not make it through parliament on the December 11th, including suggestions that May will struggle to survive a confidence motion.

It’s a busy week for market data this week with UK PMIs due through the early part of the week. Carney and Powell are also due to speak in the week. The US-China rhetoric will no doubt continue and play a significant role in influencing risk appetite, and so - of course – will Brexit headlines, especially so as we get closer to December 11th.


The Australian dollar rises to a four-month high as gains in oil and equities add to a recovery in sentiment after the U.S. and China agreed to suspend tariffs. The AUD/USD advances 1 percent to a high of 0.7393, the highest since August 9.

Regarding economic data, there is the RBA cash rate decision tonight expected at 1.5 percent and GDP figures due on Tuesday. CBA isn’t optimistic of a speedy resolution to U.S.-China trade frictions, according to CBA’s note on Monday: CBA expects the US dollar to unwind its losses by the end of the week as China is unlikely to do more than tweak its “Made in China 2025” plan that so irks the U.S. government.


NZD/USD climbs 0.65 percent to 0.6924 after reaching 0.6930, the highest since June 19th. Regarding economic data, the Terms of Trade Index declined 0.3 percent quarter to quarter in Q3. New Zealand dairy production has expanded strongly this year and put a lid on prices.

The jump in the Kiwi happened on the back of a trade war ceasefire between the US and China.