The risk-on sentiment dominated the earlier trades this Tuesday on the back of the US President Trump’s optimism on the US-China trade deal. U.S. dollar rose to a new eight-week high in early trade in Europe Tuesday, as news of the deal to avert a fresh government shutdown was overshadowed by continued concerns about the U.S.-China trade war and more bearish talk out of Europe.
With one of the most obvious political risks to the U.S. economy lifted, the dollar remains the major currency best supported by short-term growth and interest-rate dynamics. The Euro, British pound and Yen are all struggling to develop any kind of momentum, given the problems in their home economies. USD/JPY surpassed the 110.50 level to hit fresh seven-week tops at 110.66, while, both the Euro and the British Pound traded better bid, looking to stabilize ahead of the key central bankers’ speeches.
The calendar today remains data-light, with absolutely no release from the Euroland as well as from the UK docket. Meanwhile, the NA calendar sees the US JOLTS job openings data for the month of December while the API will publish its weekly crude stocks data at 21:30 GMT. In the meantime, today’s scheduled speeches by several FOMC officials, including the Fed Chair Jerome Powell will also be looked upon for some meaningful impetus and short-term trading opportunities.
Oil prices gained on Tuesday in Asia following positive comments on trade by the administration of President Donald Trump and the president himself. Investors’ risk-appetite got a boost following White House senior counsellor Kellyanne Conway’s comments on Monday, saying that the US President Donald Trump may still meet Chinese President Xi Jinping soon and that it looks like the US and China are getting closer to deal.
Gold builds on overnight late bounce, as gold prices driven almost entirely by US Dollar movements. Investor sentiment was improved on Tuesday after the positive comments from the U.S. side today regarding the trade deal with China, but a quick resolution before the March 1st deadline doesn’t look too promising, with U.S. negotiators pressing China on longstanding demands, including reparations for alleged theft of U.S. intellectual property.