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The Loonie was still in demand during the morning London session, thanks to confirmation that NAFTA has been successfully renegotiated (and renamed to USMCA).

Trade-related optimism also continued to fuel risk-taking, which is likely why the safe-haven Swissy was struggling during the session.

Other than those two, the euro is also worth highlighting since it was the second top-performing currency of the session, despite negative low and mid-tier economic reports, as well as lingering Italy-related concerns.

  • German retail sales m/m: -0.1% vs. 0.4% expected, -1.1% previous
  • Swiss retail sales y/y: 0.4% vs. as expected, -0.9% previous
  • Spanish manufacturing PMI: 51.4 vs. 52.7 expected, 53.0 previous
  • Swiss manufacturing PMI: 59.7 vs. 62.1 expected, 64.8 previous
  • Italian manufacturing PMI: 50.0 vs. 50.3 expected, 50.1 previous
  • French final manufacturing PMI: unchanged at 52.5 as expected
  • German final manufacturing PMI: unchanged at 53.7 as expected
  • Euro Zone final manufacturing PMI: 53.2 vs. no change from 53.3 expected
  • U.K. manufacturing PMI: 53.8 vs. 52.6 expected, 53.0 previous
  • U.K. net lending to individuals: £4.0B vs. £4.8B expected, £3.8B previous
  • Mortgage approvals in the U.K.: 66.44K vs. 64.50K expected, 65.16K previous
  • Euro Zone jobless rate: 8.1% as expected vs. 8.2% previous

Major Events/Reports:

Trump tweets about NAFTA (or  USMCA)

U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland issued a joint statement earlier, confirming the rumors about a renegotiated NAFTA deal.

Also, the renegotiated NAFTA deal will be called the “United States-Mexico-Canada Agreement” or USMCA for short.

Trump also chirped in later. And in typical Trump fashion, Trump did so via a couple of tweets.

U.K.’s manufacturing PMI

It’s a brand new month, which means another batch of U.K. PMI reports from Markit.

And today, we finally got our hands on the U.K.’s manufacturing PMI report for the September period. And it was better-than-expected since the report revealed that the headline reading climbed from 53.0 to 53.8, contrary to expectations that it will slide to 52.6.

The details were also pretty good since the report noted that “[r]ates of expansion in output and new orders gained traction.”

New orders growth was driven mainly by domestic demand but “new export business [growth] saw a modest recovery following August’s solid contraction.”

In addition, employment “also increased at the end of the third quarter.”

Moreover, “September data signalled a strengthening of both input cost and output price inflationary pressures.”

Raab speaks

Brexit Secretary Dominic Raab gave a speech at the Conservative Party’s Conference earlier today.

And he took the opportunity to hit out at the E.U., saying that the E.U. has a “a starkly one-sided approach to negotiation” and left “no room for serious compromise,” adding that “If the EU want a deal, they need to get serious. And they need to do it now.”

Raab also reiterated that the U.K. is ready for a no deal Brexit.

“If the only offer from the EU threatens the integrity of our Union then we will be left with no choice but to leave with no deal.”

“What is unthinkable is that this government, or any British government, could be bullied by the threat of some kind of economic embargo, into signing a one-sided deal against our country’s interests.”

Hammond speaks

Raab wasn’t the only speaker at the Conservative Party Conference who touched on the Brexit topic since Finance Minister Philip Hammond also got a chance to speak and he said that:

“Clearly there has been a hit to the economy through the uncertainty that the Brexit process has caused.”

“Many businesses are sitting on their hands frankly waiting to see what the out turn of this negotiation is before confirming their investment plans.”

However, Hammond was more conciliatory towards the E.U. when he said that “The mood is undoubtedly that people [over at the E.U.] want to do a deal with the U.K.

Hammond also expressed optimism that the British economy would improve once a deal is hammered out:

“I believe when the prime minister lands this deal and brings it back there will actually be a boost to the economy.”

Upbeat start in Europe

After last week’s beat-down, the major European equity indices are starting the new week (and month) on a positive note.

And like in the earlier session, market analysts were attributing the risk-friendly vibes on trade-related optimism.

  • The pan-European FTSEurofirst 300 was up by 0.34% to 1,508.67
  • Germany’s DAX was up by 0.71% to 12,332.31
  • The blue-chip Euro Stoxx 50 was up by 0.52% to 3,419.55

U.S. equity futures were in positive territory, so the risk-on vibes may carry over into the upcoming U.S. session.

  • S&P 500 futures were up by 0.63% to 2,937.50
  • Nasdaq futures were up by 0.80% to 7,716.75

Major Market Mover(s):

CAD

The Loonie raked in more gains and was the top-performing currency of the session, thanks to optimism over the renegotiated NAFTA deal.

USD/CAD was down by 33 pips (-0.26%) to 1.2806, NZD/CAD was down by 27 pips (-0.32%) to 0.8456, AUD/CAD was down by 20 pips (-0.22%) to 0.9240

CHF

Unlike last week, the Swissy’s weakness made more sense during the session since risk-taking was the name of the game in Europe.

USD/CHF was up by 23 pips (+0.23%) to 0.9837, GBP/CHF was up by 24 pips (+0.19%) to 1.2812, CAD/CHF was up by 39 pips (+0.51%) to 0.7681

EUR

The euro caught a bid from the get-go and even managed to take ground from the Loonie at first, but was eventually forced to bend the knee to the Loonie’s overwhelming might.

The euro still managed to close out the session in second place, though, which is rather weird since there were no apparent catalysts and there were even disappointing low and mid-tier economic reports. And market analysts were even noting that Italy-related concerns haven’t gone away.

EUR/USD was up by 20 pips (+0.18%) to 1.1600, EUR/JPY was up by 22 pips (+0.17%) to 132.19, EUR/CHF was up by 45 pips (+0.39%) to 1.1410

Watch Out For:

  • 1:00 pm GMT: Atlanta Fed President Raphael Bostic will speak
  • 1:30 pm GMT: Markit’s Canadian manufacturing PMI (56.8 previous)
  • 1:45 pm GMT: Markit’s final U.S. manufacturing PMI (no change from 55.6 expected)
  • 2:00 pm GMT: ISM’s U.S. manufacturing PMI (60.1 expected, 61.3 previous)
  • 2:00 pm GMT: U.S. construction spending (0.5% expected vs. 0.1% previous)
  • 3:00 pm GMT: U.S. President Trump will speak
  • 4:00 pm GMT: Canadian PM Justin Trudeau will speak
  • 5:00 pm GMT: BOC Deputy Governor Timothy Lane has a speech