The US dollar is slightly higher in a quiet start to the week. The annual Davos meeting lacks the cache of get-togethers as President Trump, and French President Macron are not attending. Mr Trump’s absence takes away any possibility of drama from the conference and turns it back into just a chin wag for wealthy elites.
China’s Q4 GDP data came in at 6.4%, y/y or 1.5% q/q. The financial media are trumpeting that it is the lowest growth rate in 28 years, but for markets, the news was expected. The Canadian dollar and the antipodean currencies were sold on the news and remained soft until this morning’s Toronto open. Traders continue to be focused on the US/China trade talks and the prospect of a positive resolution.
EUR
EURUSD traded heavily on broad US dollar demand and because German Producer Price data was weaker than expected (Actual -0.4% vs forecast -0.1%)
GBP
GBPUSD is a tad lower with traders waiting for Prime Minister Theresa May’s Brexit Plan “B” which isn’t expected to be much different from Plan A. GBPUSD sank, rallied and is currently trading close to unchanged from Friday’s close.
OIL
Oil prices are consolidating Friday’s gains in a $53.35/barrel-$54.15/b range. The price retreated after the China GDP data, but traders remain optimistic that a US/China trade deal will spur demand.
US markets are closed for Martin Luther King Day, and there isn’t any Canadian data on tap. Trading will dry up when the UK goes home for the day.
CAD
USDCAD drifted higher overnight, tracking broad US dollar moves. The oil price rally is acting as a drag on US dollar gains, but the perception that the Bank of Canadian has a dovish monetary policy outlook is limiting losses.
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