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The Buck is trading generally stronger this morning as broad market risk aversion reflected by lower domestic and global equities has encouraged another flight to quality coupled with New York Federal Reserve Bank President John Williams stating that the domestic economy remains “strong” at this time. These comments were extremely well timed after the market focused on the inverted yield curve to deduce we could be heading for a recession in the near future. While this remains a major issue that market participants will continue to monitor, historical analysis on yields may be difficult to apply as the Fed has raised levels form record lows quite rapidly which is unique and long term yields take longer to rise than short term ones.

The Greenback improved to its best level since Friday versus the Euro overnight but EURUSD ticked up a bit to put it sideways on balance, hit its best level against the Canadian Dollar since Friday also with USDCAD still elevated now, was largely sideways in its pairing with the generally firmer British Pound today, ticked up versus the generally firm Yen after USDJPY touched a 15-day low yesterday, managed a 16-day best against the Swiss Franc overnight which rebounded along with the Euro this morning, rose to a one-week high in its pairing with the Aussie along with a two-day peak versus the Kiwi on risk off trading as the commodity currencies were under pressure, while it was sideways with the Mexican Peso today.

On the data front, the Fed Beige Book is on tap late this afternoon with Federal Reserve Vice Chair of Supervision Randal Quarles speaking from Stanford this evening. The ADP Non-Farm Employment Change is tomorrow along with the Trade Balance number, Final Services PMI, followed by Fed Chair Jerome Powell speaking in the early evening with the key US Employment Report due Friday morning.

The Canadian Dollar is trading broadly softer this morning ahead of the Bank of Canada (BoC) monetary policy meeting at 10am today as the commodity currencies took a general step back on market risk aversion despite an uptick in oil and gold prices. electricity flow direction The Loonie fell to its weakest since Friday versus the Buck, Euro, and Sterling overnight. While the BoC is not expected to raise interest rates at this meeting, it could be significant in the context of Deputy Governor Carolyn Wilkins recently speaking about whether the neutral rate could be a lower band at this time given low global interest rates. While the BoC is clearly going to continue to raise interest rates to some extent per recent statements from BoC there is real question as to the extent of tightening as BoC Governor Poloz has stressed an end to stimulus and return to normalcy rather than stemming any significant inflation pressure. Tomorrow, the Canadian Trade Balance is scheduled to be released literally five minutes before BoC Governor Poloz is set to give a speech in the wake of today’s meeting, followed by the Ivey PMI number. The Labor Productivity QoQ release yesterday was 0.1% better than anticipated at +0.3% yesterday ahead of the key Canadian jobs numbers scheduled for release simultaneously with the US Non-Farm Employment Change number on Friday morning.

The Euro fell to its lowest against the Greenback overnight since Friday on concerns that US tariffs of up to 25% on European auto imports could still potentially be implemented at this time, risk off trading, along with the continuing protests in France over increased fuel taxes. gas in chest The Euro did manage to recover from its overnight lows against the Buck, but does remain softer than 24 hours ago. French President Emmanuel Macron saw his approval rating drop to under 30% which pushed him to announce on television that he is changing his plans on fuel taxes which should alleviate protests but this still goes to heightened political uncertainty. electricity projects in pakistan Eurozone Retail Sales MoM were 0.1% better than anticipated today at +0.3% but the previous release was revised down significantly to -0.5% from 0.0% which was already a 0.1% miss for the reading last month so this was positive but mixed on balance. EU Final Services PMI was a hair above target at 53.4 versus 53.1 forecast today. European Central Bank (ECB) president Draghi was rescheduled to speak in a bit from earlier today. The only European release tomorrow is German Factory Orders MoM with the key Revised GDP QoQ and Final Employment Change QoQ on tap this Friday morning.

The British Pound fell from its five-day high versus the Buck yesterday with Cable largely sideways overnight, rose to a two-day high versus the Euro, along with a six-day peak against the Loonie this morning. The UK Services PMI missed at 50.4 compared to 52.5 forecast consensus and 52.2 previous this morning but it was all about Brexit news again with Sterling rebounding in some technical trading from a tough day yesterday. Former Bank of England (BoE) Governor Mervyn King really ‘stirred the pot’ yesterday as he criticized key assumptions about the extent of BoE assertions about the potential economic turmoil in the event of a disorderly Brexit while also calling the Prime Minister’s Brexit plan a “betrayal of Britain” also. Current BoE Governor Mark Carney staunchly defended his position of the serious potential negative impact of a “no deal” result. gas density problems Sterling got some support yesterday morning after the Prime Minister’s spokesman commented that the government position is that Article 50 will not be revoked in response to an earlier EU source asserting that it could happen. The pound slumped back to pivotal support levels later in the day, but was saved from further weakness, as MP’s voted to give Parliament more power over the next Brexit steps if PM May is defeated on December 11th. This could mean that there will be a meaningful vote on a no-deal scenario and provide Parliament with the ability to avoid a no-deal Brexit. In total, the government lost 3 votes yesterday, which was the worst series of Commons defeats on a single day for 40 years. The Halifax HPI MoM release is due Friday while traders continue to focus carefully on Brexit news.

The Dollar rose to a one-week high versus the Aussie Dollar while touching a two-day best against the Kiwi as broad risk aversion reflected by lower global equities and worse than expected Australian GDP QoQ at +0.3% compared to +0.6% consensus weighed on the antipodean commodity currencies despite stronger oil and gold prices. The AUD and NZD remain elevated on the week after the good news about US trade negotiations with China after the G20 over the weekend, but they do remain positively correlated to risk on at this time. The Australian Trade Balance and Retail Sales are scheduled for release early this evening.

The Yen pulled back against the Buck after USDJPY touched a 15-day low yesterday while also losing some ground in tis pairing with the Euro after ERURJPY touched a three-week trough as well yesterday. That said, the Japanese Currency remains strong on the risk-off environment as it is trading at a two-week high versus the Canadian Dollar at this time. There is no Japanese data scheduled for today.

The Swiss Franc actually fell to a sixteen-day low versus the Buck overnight but managed to rebound on the uptick in the Euro coupled with its safe haven status amid softer risk tolerance overnight today. The worst CPI MoM since August 2017 yesterday at -0.3% weighed on the Franc yesterday. d cypha electricity futures Swiss Foreign Currency Reserves are scheduled for Friday morning also.