Sterling on the other hand refuses to fall as investors hope for an agreement on the Irish border. This is an important week for the UK – not only will the latest trade balance, industrial production and monthly GDP report be released but EU Chief Negotiator Barnier is scheduled to formally present their “super charged” trade proposal on Wednesday. We’ll have to see how the UK responds but if Monday’s comments are a guide, then acceptance of their offer probably won’t happen this week. According to a UK official, there are many big unresolved issues and if you recall last week, Prime Minister May made it clear that a no-deal Brexit is still in the cards.
Despite the losses in China, the Australian and New Zealand dollars rebounded against the greenback while the Canadian dollar slipped back. No economic reports were released from any of these countries but AUD and NZD should have fallen on the back of the sell-off in Chinese equities. Instead, their recovery tells us how deeply oversold these currencies are. However with the U.S. still targeting Chinese trade, we don’t expect significant recoveries for AUD and NZD. The Canadian dollar on the other hand should rally with the market pricing in 100% chance of a rate hike by the Bank of Canada this month. The Hurricane brewing in the Gulf could also drive up oil prices, which would put additional pressure on the loonie. See more https://alpari.com/en/platforms/