USD/CAD drops to lowest since May
USD/CAD fell to its lowest level since May 23 following reports in the financial press that the US and Canada were “very close” to agreeing to a revised NAFTA ahead of an Oct 1 deadline. Later, the deal was largely confirmed as PM Trudeau said it was “a good day for Canada” while the Mexican foreign minister added it was “a good night for Mexico and for North America”.
The deal would allow Canada to join the agreement reached between the US and Canada back in August. Sources suggest that Canada exports of autos will be capped at a certain level, and Canada is to allow US access to about 3.5% of the domestic dairy market.
USD/CAD traded below the 200-day moving average at 1.2870 for the first time since April 19, and is now testing the 55-week moving average at 1.2816. The pair is currently holding at 1.2829.
USD/CAD Daily Chart
Will US PMIs echo the gloom in China?
The weekend release of China’s manufacturing PMI data for September was disappointing, with the official numbers showing a drop to 50.8 from 51.3 (estimates were for a slight drop to 51.2), the weakest reading in seven months. The PMI has held above the 50 threshold denoting contraction/expansion for the past two years. The Caixin PMI also fell, dropping to 50.0 from 50.6.
NOTE: China markets are closed all week so the reaction in the yuan has been relatively muted
Later today we see how much the US manufacturing sector has been affected by the US-China tariff war. The ISM reading for manufacturing is expected to slip to 60.5 from 61.3, which was a 7-year high, as the impact of the tariffs starts to bite.
Fed speakers on tap
The rest of the data calendar features German retail sales for August and the Markit manufacturing PMI for September, UK bank lending and money supply data and Euro-zone’s unemployment rate for August. FOMC members Bostic (dove, voter) and Rosengren (hawk, voter) are due to speak, though neither is likely to shift away from the tone of the FOMC statement.
You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/
Oanda’s Innes Sees a Bumpy Ride for Markets in 4Q
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