Trade on Wednesday, January 15 in the morning is very calm. We do not observe major changes on the currency market. The range of fluctuations of major currencies against the dollar can be in the range of 0.12 percent to -0.08 percent at 08:20.
From the point of view of investors' attitude from the currency options market, the pairs such as GBP/USD and AUD/USD that could be characterized by the highest implied volatility today - according to the overnight fx options market. By the same measure, the USD/CAD pair seems to be the most calm market today, where the expected volatility is the lowest.
The market notes the news agency reports that the US Department of Commerce has developed a rule that would block exports to the Chinese giant Huawei Technologies Co. This information could cause, among others halting a systematic upward movement on the USD/JPY pair, where the yen has weakened against the dollar to levels unseen for about eight months. After reports, the yen strengthened slightly. Also, AUD and NZD slightly lost in value after other reports that existing billions of dollars in tariffs will continue to apply until the US presidential election.
Today, later in the day, the phase one of the US-China trade agreement is to be signed, where China is to agree to increase the import of agricultural goods and resolve some of the issues related to intellectual property protection. In return, the Americans will suspend the introduction of new tariffs on Chinese products and reduce the tariffs currently in force. Nevertheless, after signing the agreement, the United States will only check progress after at least 10 months and potentially consider reducing tariffs on imports from China, according to subsequent reports.
To sum up, signing the phase one of the trade agreement is a step in the right direction, but the trade war will not end there and we still have many months of uncertainty with the negotiations on the second phase and with the presidential elections in the US, which will take place in November 2020.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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