- Saudi Arabia informs that it is going to freeze all trade and investment ties with Canada
- Donald Trump hails tariffs’ effects, China’s state media says it will not accept the US trade blackmail
- US dollar slightly higher, Asian stocks mixed as a new week gets started
The Canadian dollar is delicately poised this morning as investors are digesting the news concerning a trade and investment relationship between Saudi Arabia and Canada. The former country has said that it is freezing all trade and investment ties with Canada in retaliation for its “interference” in the Gulf Kingdom’s internal affairs. This response came after Canada had said that it was “gravely concerned” about the arrest of several human rights activists. The country also urged the Saudi authorities to immediately release them. In response to this the Saudi Arabian foreign ministry said it “will not accept any form of interfering” in its internal affairs. As a result it presented some steps it has undertaken including freeze of all new trade and investment transactions between countries, a consideration of ordering the Canadian ambassador to leave within 24 hours, recalling the Saudi envoy in Canada. In addition to these, the country said it reserved the right to take further action if needed.
So far the USDCAD has not responded too sharply and it’s basically trading a bit lower due to the widespread USD strength. Technically one may identify a local short-term resistance at around 1.3075 which could prevent bulls from pushing higher. Source: xStation5
Over the weekend we were also offered some interesting tweets from the US President Donald Trump. In these tweets he hailed effects of implemented tariffs saying that they “have had a tremendous positive impact on our steel industry” adding that they “are working far better than anyone ever anticipated”. He also added that thanks to tariffs the US will be able to start paying down large amounts of the $21 trillion debt. Taking into account that borrowing needs of the world’s largest economy will be rising due to tax cuts (the Treasury already announced larger bond issuances in the third quarter) one may arrive at a conclusion that the US could be unlikely to back down. In turn, a Chinese state media said over the weekend that its country would not accept the US blackmail therefore resorting to threatening would not bear fruit.
In a series of tweets Trump hailed tariffs’ effects on the US steel industry. Source: Twitter
In the morning we cant notice that the US dollar is gaining clearly the most with the euro trading close to 1.1550 – well below its lower bound of the last range of 1.1590/1.1750. Notice that this strength came following the July’s jobs report which produced another solid numbers when it comes employment. On the other hand, the report did not bring any shocking numbers in terms of wage growth with annual dynamic hovering far below 3%. As far as Asian stocks are concerned one may see a mixed picture with the Shanghai Composite falling 0.9% and the Hang Seng rising 0.2% as of 7:52 am BST.
The US dollar index is trying to break its crucial resistance, but it may find it hard to do durably. Notice that it already had several failed attempts to move through 95 but none of them succeeded. Source: xStation5