Last Week’s FX and Economy Summary Nov 11, 2019

Cautious optimism over US-China trade

The overall rhetoric from the US and China was positive on hopes that a phase-one deal would be secured.

There were also comments that there could be a roll-back in existing tariffs on Chinese and US exports as part of the deal. This speculation boosted risk appetite and curbed demand for defensive assets. There was, however, a high degree of uncertainty and clear evidence of divisions within the US Administration.


The ISM non-manufacturing business confidence data recorded a significant improvement for October.

The data provided important relief over the economic outlook and offset unease over the manufacturing sector.

Federal Reserve officials were slightly more optimistic over the outlook with Atlanta Fed President Bostic for example, stating that he would have voted against the October rate cut and that the central bank should wait and see on future rate cuts.

Futures markets indicated that the chances of a further rate cut at the December meeting were down to around 5%. Bond yields moved higher which provided important dollar support.


The Bank of England held interest rates at 0.75% following the latest policy meeting, in line with consensus forecasts, although two committee members voted for an immediate rate cut.

The guidance from the bank was less confident and entrenches political uncertainty or no improvement in the global economy could trigger a cut in interest rates. The bank did, however, state that the risks of a ‘no-deal’ Brexit had declined.

The overall rhetoric and increased speculation over a rate cut undermined Sterling support.

The UK General Election triggered substantial heat, but little net direction. Opinion polls continued to indicate a significant lead for the Conservative Party and Prime Minister Johnson, but there was a high degree of uncertainty which limited currency support.


German industrial orders and trade data registered a slight net improvement for October which triggered some expectations of a recovery in the economy.

German bond yields moved higher on the week, but the Euro was unable to benefit. 

Results from the Spanish General Election indicated that no majority had secured a majority once again.


The Reserve Bank of Australia held interest rates at 0.75% at the latest policy meeting. The statement was little changed overall with comments that interest rates could be cut again if necessary, but that there was evidence of a gentle turning point in the economy.

New Zealand unemployment increased to 4.2% from 3.9% previously and NZD/USD lost ground.

The Canadian labour-market data recorded a 1,800 decline in employment for the month, although unemployment declined to 5.5% from 5.6%. The data overall undermined the Canadian currency.

Tim Clayton

Tim Clayton is a market analyst with more than 20 years of experience in the financial markets, with particular focus on currencies. Holds an economics degree from University of New York. Writes for multiple publications including and SeekingAlpha so he is on top of all the happening in the world of currencies and macro-economics.

Leave a Reply

Notify of