News & Analysis

U.S – Canada reach trade deal – CAD 4-Month highs; Oil jumps back above $75; RBA to come today

Oct 2, 2018 | Market Updates

Upcoming high impact news:

14:30 AUD RBA Rate Statement – Cash Rate EXP hold 1.50%
02:45 USD Fed Chair Powell Speaks

U.S markets close mixed, Nafta deal reached with Canada lifts Dow and S&P500. “The biggest risk factor [in the market] is a trade war and we’ve dialled that down a bit,” said Mike Bailey, director of research at FBB Capital Partners

Canada and the U.S. secured a trade deal to replace the current North American Free Trade Agreement (NAFTA). The new accord is expected to be named the United States-Mexico-Canada Agreement, or “USMCA” for short.

The agreement will deliver more market access to U.S. dairy farmers, while Canada has effectively capped automobile exports to the States. Both nations, along with Mexico. The Dow + 192.90 – the S&P500 +10.61 and the Nasdaq closed 9.05 lower.

Oil jumped back to 2014 highs. Brent crude trades above $84 a barrel ahead of a November deadline for oil buyers to comply with U.S. sanctions on Iran. Investors and analysts are beginning to anticipate the possibility that Brent will hit $100 a barrel. The new Nafta deal and Iranian sanctions lifting price. Oil futures extended their rally on Monday, hitting their highest levels since November 2014, as U.S. sanctions on Iran come into force and a North American trade deal fosters growth. USOUSD surged 190+ cents higher to close at 75.33. Buyers breaking through July resistance.

Gold closed lower as the dollar firmed in the wake of indications from the U.S. Federal Reserve last week that it will pursue a tighter monetary policy. Price closed $3.60 lower, buyers did pare some earlier losses. Risk also had a mixed session to the USD, the AUD and EUR closing lower. The GBP finished just in the black but trimmed a 70 rally. The CAD hit 4-month highs after the Nafta deal. This sent the USDCAD 40 pips lower after it’s 60 pip lower open. The USD made gains to the Yen, risk was mixed the AUD and GBP closing higher but the EUR fell to the Yen. The EUR didn’t have many friends last night as trades still worry about Italy’s deficit.

Today AUD traders will be looking to the RBA at 2:30 pm for the rate statement and cash rate. The RBA is expected to hold rates at 1.50%.

Good Trading from Eightcap

Sources; CNBC – All times are AEST

* The information provided here has been prepared by EightCap’s team of analysts. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and do not reflect the opinions of EightCap.

In addition to the disclaimer on our website, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. EightCap accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.

Please note that past performance is not a guarantee of or prediction of future performance. This communication must not be reproduced or further distributed without prior permission.