Russell Sandiford
Reiwa-Capital.com
We are seeing a shift in sentiment around the trade frictions which is tilted to the negative side of the coin.
Sadly, the headlines highlight how far we are from a Phase 1 trade deal being signed off and a scale back of trade tariffs.
China have maintained that they feel that the trade tariffs were part of the trade war, and as such, these should be removed as part of any trade deal. The US isn’t so agreeable and maintains these are key leverage within their negotiation process taking another twist.
Things are far from improving in the HK turmoil. In fact, the 5-straight days of financial district CBD chaos in HK city is a massive escalation compared to organised protests on a Sunday.
This issue coupled with the US looking to pass a bill regarding HK can spiral the trade war into extremely negative territory, as it inspired more conflict between China & the US - which will favour the following 2 main trades:
Key FX & Gold Trade:
- Long Gold &
- Long USD/CAD trades to play the risk sentiment.
Risk Sentiment & FX Trade:
When we add the Bank Of Canada outlook speech (set for tonight’s US Dealing Session) with the HK turmoil and trade frictions, this only means one-way USDCAD can go.
Higher.
- Look for 1.3250 to be Bid towards 1.3330.
- BUY
- USD/CAD
- 1.3250
- Target 1.3330
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