Morning Commentary: Inch by Inch

Foreign Exchange - Morning Commentary
Inch by Inch
Share this story:
Alan Rose
Alan Rose
Foreign Exchange Senior Trader
As we enter a shortened Holiday week for many in the U.S. and Canada, markets have gotten off on a somewhat optimistic footing. Positive news regarding the U.S. – China trade talks have spurred global equities modestly higher but it has been a mixed bag for other asset classes with G7 interest rates flatlining and commodities mixed; the U.S. dollar is slightly stronger against most of the major and emerging market currencies with safe have currencies and assets fractionally weaker. 

China announced over the weekend that it will strengthen its oversight of intellectual property (IP) violations which has been one of the bigger points of contention to move toward a Phase 1 conclusion of the trade talks. China announced that it will raise penalties on IP theft and even publish official guidelines. Chinese media agencies reported that the two sides are “very close” to closing out the Phase 1 deal. There has been no official reaction from the White House at this time but markets (mainly equities) are treating this as a positive step to reducing trade tensions between the biggest economies of the world and help to normalize trade again.

We have regularly pointed that the Trump Administration needs a win regarding trade as we enter the 2020 election season. There is only one party in China and all signs point toward President Xi’s strong backing from the Communist Party regarding trade and the political instability in Hong Kong.  A slowing U.S. economy and an ongoing impeachment inquiry make it paramount that the White House get a victory on trade to help make a case for another four years in office. Helping farmers get off the dole and any jumpstart to manufacturing and the industrial base can only help make that case.
  • Local elections in Hong Kong gave an overwhelming majority to pro-democracy candidates. They took nearly 85% of the seats compared to 25% in the 2015 vote; pro-government candidates took only 13% of the seats compared to 65% in 2015. There was a record turnout of nearly 71% of eligible voters. How the Chinese government reacts to these results remains to be seen.
  • The German IFO business survey came out near expectations and provided further guidance that the German economy is leveling off with some commentary regarding the report as evidence of green shoots. The three main indices of the survey all were stronger than in October but generally met expectations. EZ interest rates are unchanged and the euro is down for the third day in a row.
If we can help you with any Foreign Exchange needs, please email or call (800) 447‑4133.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Facebook Twitter LinkedIn Google Plus YouTube
Non-deposit investment products:
Are not FDIC insured,
Are not deposits or other obligations of City National Bank and are not guaranteed by City National Bank, and
Are subject to investment risks, including possible loss of the principal invested.
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.
Unsubscribe from this list  |  Update email preferences
This message has been sent to Please do not reply to this email. To ensure the delivery of future emails, please add to your email address book or safe sender list.
Copyright ©2019 City National Bank – All Rights Reserved.
350 South Grand Avenue, 12th Floor, Los Angeles, CA 90071
City National Bank is a subsidiary of Royal Bank of Canada.
Equal Housing Lender
NMLSR ID# 536994 | City National Bank Member FDIC


Popular posts from this blog

Acquisitions or Alliances: What's Your Growth Strategy?