Dollar falls on improved risk sentiment due to U.S.-China trade optimism

The greenback remained on the back foot in Asia and Europe and ended Tuesday lower against majority of its peers, except for the safe-haven Japanese yen due to return of risk appetite on U.S.-China trade optimism as reports suggested progress is being made in the Phase 1 agreement.  
  
Reuters reported U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He on Monday, the U.S. Trade Representative's Office said in a statement, and both sides see progress on trade issues and are committed to making the Phase 1 agreement reached in January a success.   
  
Versus the Japanese yen, although dollar retreated from 106.04 at Asian open to 105.88, renewed buying interest emerged and the pair rose to 106.49 in Europe on U.S.-China trade optimism as well as rally in U.S. Treasury yields before retreating to 106.26 shortly after New York open on profit-taking. However, price then gained to session highs of 106.57 and then moved sideways.  
  
The single currency found renewed buying at 1.1784 at Asian open and gained to 1.1814 on improved risk sentiment due to U.S.-China trade optimism. The pair then ratcheted higher to 1.1842 in Europe due partly to slightly better-than-expected German Ifo data before retreating to 1.1804 in New York on profit-taking. Later, euro briefly rose in tandem with cable to session highs at 1.1844 but only to weaken again to 1.1806 and traded at 1.1833 near the close.  
  
Reuters reported German Ifo business climate index in August 92.6 versus forecast for 92.2. German Ifo current conditions index 87.9 in August versus forecast for 86.9.   
  
The British pound also rose from 1.3059 at Asian open to 1.3115 on return of risk appetite and despite retreating to 1.3078 at European open, cable later rose to session highs at 1.3170 in New York morning on cross-buying in sterling before weakening to 1.3115 due to profit-taking.  
  
On the data front, Reuters reported the U.S. Conference Board said on Tuesday its consumer confidence index dropped to a reading of 84.8 this month from 91.7 in July. Economists polled by Reuters had forecast the index edging up to a reading of 93 in August.   
  
Data to be released on Wednesday :  
  
New Zealand imports, trade balance, exports, Australia construction work done, Japan coincident index, leading economic index, France consumer confidence, Swiss investor sentiment, U.S. MBA mortgage applications, durable goods, durables ex-transportation, durables ex-defense.