Risk-off sentiment extended into Europe this Tuesday, due to the overnight positive Brexit developments and further US-China trade talks. The British pound rallied and reached the 1.3290 levels following reports that the UK PM May managed to clinch some Brexit assurances on the Irish backstop from the European Commission President Juncker. However, GBP/USD pulled back into the 1.32 handle, as market participants seemed inclined to take some profits off the table and refrained from placing aggressive bets ahead of the highly anticipated UK parliament vote.
Meanwhile, EUR/USD managed to hold onto gains near 1.1275, as the greenback traded on the back foot across its main peers amid reports of fresh talks on the US-China trade matter. The Yen traded on the offers amid dovish BOJ comments, weak fundamentals and risk-on action in the Asian equities, leaving USD/JPY above the 111.30 levels.
Tuesday’s EUR calendar started with the UK manufacturing production and monthly GDP rate alongside with the trade and industrial figures, all released at 09:30 GMT. UK GDP/manufacturing & industrial production data came in stronger than expected, but a larger than expected jump in the UK trade deficit largely offsets the positive readings.
The NA session remains eventful also, with the US Feb CPI report due at 12:30 GMT and the Parliamentary meaningful vote on the UK PM May’s Brexit deal around 19:00 GMT. In the meantime, the speech by the FOMC member Brainard will draw some attention, as the US CPI figures could back up the Fed pause. Also, of note remains the US API crude stockpiles data that will drop in at 21:30 GMT.
Oil prices rallied on Tuesday as supply cut concerns from OPEC remain in command. The energy benchmark gained traction as weekend comments from Saudi Arabia seems to prove right after recent statements from the OPEC secretary. Oil prices were also boosted by reports over the weekend that the U.S. and China, the world’s two largest oil-consuming nations, have agreed on many crucial issues in the latest trade talks and have held meaningful discussions on foreign exchange. Energy traders may now await weekly inventory details from API and EIA to determine near-term trade direction.
Gold is trading in the green despite signs of risk reset, even after the European Commission agreed to provide additional assurances in an updated Brexit deal. The precious metal is flashing green, possibly due to the weak tone in the US Dollar.