US dollar

Today’s sentiment across the financial markets was lifted by increased hopes of a US-China trade deal, as the delegates from both the countries was supposed to wrap up trade talks in Tuesday. China and the U.S. extended trade talks for an unscheduled third day on Wednesday, amid signs of progress on issues including buying of U.S. farm and energy commodities and increased access to China’s markets.

The news boosted investor sentiment and lifted Asian stocks, as most major markets traded gained on Wednesday. As a result, the Asian stocks climbed to 3.5-week highs and the commodity-linked currencies saw solid gains.

USD/JPY pair traded firmer but remained capped by the 109 barrier amid increased nervousness heading into the FOMC December meeting minutes release. Both the EUR and the pound benefited from a broadly weaker US dollar. The Trump’s address to the nation on border security turned out to be a non-event, having little impact on the dollar.

The EUR macro calendar remains relatively quiet today, in absence of first-tier economic releases. Hence, the focus remains on the German trade figures due to be reported at 07:00 GMT, followed by the Eurozone jobless rate that will be reported at 10:00 GMT. The UK docket remains almost empty, with BOE’s Governor Carney’s speech scheduled at 15:30 GMT.

In contrast, the NA session remains eventful, with the key central bank action headlining amid second-tier macro updates. The main event risk for today remains the December FOMC meeting minutes release that will offer fresh cues on the Fed’s 2019 rate hike outlook, prompting fresh US dollar trades.

Oil prices gained on Wednesday, with WTI crude rising above the key $50 per barrel mark on hopes for a China-U.S. trade breakthrough. At 15:30 GMT, the official US government weekly fuel stocks data will be reported by the EIA. The recent rally in oil prices further boosted the risk-on trades.

Gold prices traded on the defensive near 1282 levels on Wednesday amid continuous optimism over U.S.-Sino trade talks, amid a gradual recovery in risk assets.