Forex Today: 2020 kicks off with the dollar recovering amid Chinese RRR cut, trade optimism
|Here is what you need to know on Thursday, January 2, 2020:
China announced a 50 basis point cut to its Reserve Requirement Ratio (RRR) on New Year's Day, unleashing over $100 billion in liquidity. Markets are cheering the move, which authorities had hinted to. The Caixin Manufacturing Purchasing Managers' Index ticked down to 51.5, still reflecting growth.
The US Dollar is recovering some of the ground it lost in the dying days of 2019, with EUR/USD slipping toward 1.12, GBP/USD pressured toward 1.32, and AUD/USD dipping under 0.70. The move seems to be related to profit-taking.
Trade: Ahead of the holiday, President Donald Trump announced that the US and China will sign Phase One of the trade deal on January 15. Further talks will begin afterward.
Final manufacturing PMIs are due out today in Europe and in the UK. The industrial sector has been struggling.
Oil prices are off the highs despite higher tensions between the US and Iran. Protesters stormed the American embassy in Baghdad after a US strike on Iranian-backed militias in Iraq.
Cryptocurrencies kicked off 2020 on the back foot, with Ripple coming under pressure as around one billion tokens are released to the market.
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