The U.S. announced that it welcomed China saying it will send Vice Commerce Minister Wang Shouwen to the U.S. for low-level talks in late August. However, the U.S. cautioned this statement by adding that the president’s determination on trade shouldn’t be underestimated. The Chinese delegation led by Wang will meet with an American group led by David Malpass, undersecretary for international affairs at the Treasury Department, at the invitation of the U.S., China’s Ministry of Commerce said in a statement on its website on Thursday.
Markets have reacted positively albeit a bit muted, traders are still concerned with Turkey and even with Qatar’s bailout. It will still be sometime before things become settled. The USDCAD is unchanged, the manufacturing sales number should have given the CAD a boost, as well as the blip up in oil prices should have added too, indicating that traders are still nervous about the CAD.
USDCAD 1.3138, 1.3133, 1.3128 1.3148, 1.3155, 1.3166
USD-CAD has settled to a consolidation centred on 1.3100. The sharp drop in oil prices over the last couple of weeks should limit downside potential of the pairing, while the relatively strong fundamentals of the U.S. economy (we expect two more Fed hikes this year versus on only one more for the BoC). Any sure signs of progress on the NAFTA front would likely spark a rebound in the Canadian Dollar, as the uncertainty about the re-negotiation has seen a discount built into the currency. USD-CAD has support at 1.3050 and resistance at 1.3170.
EUR-USD has retreated after meeting good and consistent selling interest into 1.1400, which has been seen despite another 4% decline in USD-TRY and a broader revival in risk appetite. We anticipate choppy trading over the near-term as wary markets as developments on the latest phase of Sino-U.S. negotiations are awaited, and how successful Ankara is in negotiating its stand-off with President Trump and whether Erdogan can implement credible economic policies. Overall, we still remain bearish of EUR-USD. The relative strength of the U.S. economy should be showcased by incoming data, which in turn should girder the Fed’s course to further tightening. Despite the recent turmoil in global markets we still expect two more 25 bp hikes in the Fed funds rate this year, one in September and another in December. EUR-USD has resistance at 1.1425.