Risk rebounds over US-China trade optimism, UK wages in focus

Forex Today witnessed a major turnaround in the risk sentiment in Tuesday’s Asian trading as hopes for a de-escalation of the Sino-U.S. tariff war drew support from reports that China’s top trade negotiator was preparing to visit the United States ahead of a meeting between the two countries’ leaders. As a result, the appetite for the risk assets got a lift at the expense of the safe-havens.
In Europe, fears that Britain could crash out of the European Union without a Brexit deal and a growing rift over Italy’s budget hit the euro and the pound. The Italian government is facing a Tuesday deadline for it to submit a revised budget to the EU.

Fears of a likely peak in corporate earnings growth, softening global demand and faster rate hikes in the United States have put global investors on edge over the past month, prompting them to take money off the table before year end. Investor sentiment has also been dented by the deepening trade battle between the United States and China, with Asian emerging markets suffering their largest monthly foreign outflows last month since August 2011.

The session ahead will be relatively busy, as the UK sees the release of the labour market report, with the main indicator likely to be the earnings growth, which will shape up the BOE’s next policy move. The UK jobs report will be reported at 09:30 GMT, followed by the Eurozone and German ZEW survey due at 10:00 GMT. Apart from the macro data, the speeches by the ECB Governing Council members Praet and ECB Executive Board Member Lautenschlaeger are scheduled at 08:00 GMT and 08:45 GMT respectively.
In the NA session in focus will be the FOMC members Brainard and Kashkari speeches at 15:00 GMT and Daly’s speech at 22:00 GMT.

TOil prices hovered near multi-month lows after declining for a record 11th consecutive session amid softening demand. Both crude benchmarks traded near multi-month lows, still weighed down by the US President Trump’s tweet on the OPEC output policy.

Gold, as of writing, is trading at $1,202/Oz, having bounced off the psychological support of $1,200 earlier today.