Monthly Forecast: November 2019

Foreign Exchange - Monthly Forecast
November 2019
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Andrew Kositkun
Andrew Kositkun
Head Trader - Foreign Exchange
This past month continued the trend of weakening US economic data. Of specific note was the October ISM manufacturing number that moved decidedly into contractionary territory and printed its worst number in over a decade. Adding to the poor manufacturing result was the fear that services were also starting to break down. As a result, US rates dropped as markets started to price in more aggressive Fed action. Read more...
Over the past month, USDJPY has been near the upper end of the broad range it has been in since June. This move higher has been aided by a positive turn in global risk sentiment and robust yen selling to purchase foreign risk assets. Read more...
The euro has been hit by a bit of a push and pull dynamic as of late. A good illustration of this is the ECB's September easing package that was countered by improved Brexit prospects that has provided some support to business confidence in the region. Read more...
The pound made a big move up this past month as the UK and the EU surprised the markets by agreeing on a revised Withdrawal Agreement (WA). While there still remains ratification risk with the UK parliament, the renegotiated WA agreed to between the UK and the EU has materially reduced the risk for a no-deal Brexit and it is this development that has pushed the pound sharply higher. Read more...
On a year to date basis, the Canadian dollar has been the best performing G10 currency by a significant margin.
A significant driver of this performance has been the Bank of Canada's (BoC) pushback against the dovish pivot other central banks around the world have adopted. The BoC remaining on hold at its October meeting only underscores this. Read more...
The main drivers for the AUD throughout the end of the year remain the same from past outlooks, and as such, we continue to hold our bias for a weaker currency although acknowledge that there are risks for near term support. Read more...
The key development over the past month has clearly been the mini deal between the US and China that is expected to be signed this month. Due to this easing of tensions, we have moved our CNY target down as trade tensions was a key driver for a slower Chinese economy and a weaker yuan. Read more...
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This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. City National Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
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