China trade warsMarket has started the day witnessing a recovery in risk-appetite from the overnight risk slump caused by the US announcement of slapping Chinese imports with 10% tariffs as it was expected from the weekend. The risk rebound in Asia was mainly driven by the consolatory comments from the Chinese Commerce Ministry, who remarked that cooperation is the only key in the US-China trade talks.

As a result, the Yen was on the back near 112.00 handle, from the lows of 111.65, versus its American counterpart, with a rally in 10-year Treasury yields also contributing to the Dollar’s strength. Both the EUR and GBP were mostly better bid amid Brexit optimism and a broadly softer greenback.

Markets see another quiet EUR macro calendar this Tuesday, with absolutely nothing on the cards from the Euroland and the UK. Hence, the speech by the European Central Bank (ECB) President Mario Draghi will be the key focus of the day. Draghi is due to speak at 07:15 GMT at the French Prudential Supervision and Resolution Authority event, in Paris. Markets could eye some hints on the ECB’s interest rates policy, especially after central bank retained its monetary policy stance last week, and on the fresh trade wars.

In the NA session, API crude stockpiles data will remain in focus amid a lack of significant macro updates from the US. Of course, the sentiment on the global stock markets and US-China trade-related headlines will continue to drive the forex space in the day ahead.

Both oil and gold prices were in the red zone, as markets fret that should the US-China trade talks be called-off, the King dollar will be back in command across its main competitors.

Oil markets dropped on Tuesday as the latest escalation in the trade wars clouded the outlook for demand, although concerns over tightening supply offered prices some support. The oil output from seven major U.S. shale formations is expected to rise by 79,000 barrels per day to 7.6 million bpd in October, the U.S. Energy Information Administration said Monday. Elsewhere, Russia’s energy minister, Alexander Novak, said on Monday that the country was ready to discuss cooperation with the United States to balance the oil market.