Morning Commentary: Sideways

A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.

Sideways Share this story: Alan Rose Foreign Exchange Senior Trader

As we enter a long holiday weekend in the United States, markets are mixed as investors and traders reassess positioning as there has been a significant amount of optimism that has propelled markets over the past weeks.  Economic data overnight has also been mixed (see below).  The mixed economic data combined with mixed messaging from the White House regarding whether or not tariff reductions will be part of the Phase 1 U.S. – China trade agreement has left markets searching for direction.  U.S. and global equities are correcting lower today after a near historic run in October. However, U.S. and other G7 interest rates are moving in the opposite direction of equities. The U.S. dollar is in its own orbit and, after weakening for most of October, has found new life in November and is higher for the fourth day out of the past five days. Global commodity and energy prices seem to be more in-sync with equities as they are lower on the session and commodity and energy linked currencies are also weaker today. There is a general feeling on the desk that enough optimism and good news has been priced into the markets related to a break through on the U.S. – China trade talks. At this point in time, we do not even have a site or date for the signing of Phase 1 nor do we know what is included in the Phase 1 agreement. Given the fluid nature of the trade talks combined with uncertainty heading toward the U.K. election, it would seem that investors and traders are taking stock in the short term until further clarity emerges. HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT: China trade data for October came in better than expected. The overall trade balance came in stronger than expected at $42.8 billion and while both exports and imports remained in negative territory, they both came in better than expected with exports only declining by -0.9%. Moody’s cut the outlook on India’s Baa2 rating to negative from neutral. It cited increasing risks of a further economic slowdown combined with rising debt as key factors for the downgrade. The Indian rupee is down 0.45% against the U.S. dollar today. Canada posted a weaker than expected jobs report in October after two strong months of gains. Markets had anticipated a small gain in job creation but a small loss of 1,800 jobs was the result with a greater loss of full-time jobs relative to part-time jobs. The UR remained at 5.5% and hourly wages ticked higher from 4.3%b to 4.4%. The labor participation rate remained steady at 65.7%. Canadian interest rates are lower on the session and the Canadian dollar is weaker.

If we can help you with any Foreign Exchange needs, please email foreignexchange@cnb.com 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:

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 bank@banking.offers.report. Please do not reply to this email. To ensure the delivery of future emails, please add foreignexchange@emails.cnb.com 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. TERMS & CONDITIONS  |  PRIVACY STATEMENT NMLSR ID# 536994 | City National Bank Member FDIC