Market Review - 25/11/2019 23:45GMT
Dollar ends higher on US-China trade optimism
The greenback ended the day higher against majority of its peers (except the British pound) on Monday on renewed optimism that U.S. and China are moving closer to a trade deal. Sterling rallied across the board as elections polls continue to show the Conservative party in the lead.
Reuters reported China and the United States are very close to a phase one trade deal, the Global Times, a tabloid run by the ruling Communist Party's official People's Daily, said on Monday, discounting "negative" media reports. China also remains committed to continuing talks for a phase two or even a phase three deal with the United States, the state-backed Global Times said, citing experts close to the Chinese government.
Versus the Japanese yen, dollar remained on the front foot in Asia and gained to 108.79 on renewed traded optimism after U.S. National Security Adviser Robert O'Brien said a U.S.-China trade agreement was still possible by year-end over the weekend. The pair then continued to ratcheted higher after the Global Times report and hit session highs at 108.97 in New York afternoon before stabilising.
The single currency found renewed buying at 1.1015 in New Zealand and gained in tandem with sterling to 1.1025 in Asia and then to session highs at 1.1032 at European open. However, price erased its gains and fell to+a 10-day low of 1.1004 in New York morning on cross-selling in euro, especially versus sterling before rebounding to 1.1024 in New York and then trading sideways.
The British pound opened higher and gained to 1.2865 (Reuters) in New Zealand over UK election poll over the weekend which showed Prime Minister Boris Johnson's Conservative Party was in a firm lead. Despite retreating to 1.2841 in Asia, cable then rallied to 1.2885 in Europe on cross-buying in sterling before retreating to 1.2867. The pair then rose to session highs of 1.2913 (Reuters) in New York. Cable then weakened to 1.2878 after ICM poll for Reuters showed a decrease in PM Johnson's Conservatives Party before recovering again.
On the data front, Reuters reported German business morale rose, as expected, in November and Europe's largest economy is showing resilience after contracting earlier in the year, a survey showed on Monday. The Ifo institute said its business climate index rose to 95.0 in November from 94.7 in October. The November reading was in line with a Reuters consensus forecast.
"In the service sector, the business climate has improved," Ifo President Clemens Fuest said in a statement. "Traders were more satisfied with the current situation ... The signs are that business will be very good this Christmas." "Manufacturing, however, is still stuck in recession," he added.
Data to be released on Tuesday :
New Zealand retail sales ex-autos, retail sales, Germany GfK consumer sentiment, Swiss non-farm payrolls, Italy trade balance non-EU, UK BBA mortgage approvals, and U.S. building permits, good trade balance, wholesale inventories, redbook, monthly home price, CS home price, new home sales, Richmond Fed manufacturing index.
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