Dollar gains marginally higher due to short covering on market optimism over U.S./China trade talk

Market Review - 26/06/2019  23:36GMT  

Dollar gains marginally higher due to short covering on market optimism over U.S./China trade talk

The greenback ended mixed against majority of its peers except higher versus safe-haven yen and Swiss Franc on Wednesday due to renewed U.S.-China trade optimism after U.S. President Trump hinted a deal may be struck to avoid additional tariffs.  
  
Reuters reportd U.S. President Donald Trump said on Wednesday it was "absolutely possible" he would emerge from a meeting with Chinese leader Xi Jinping with a deal that would keep him from imposing tariffs he had threatened to put on China.  
  
Trump is expected to meet with Xi at the G20 summit in Japan this weekend. It will be the first time the two leaders have had a face-to-face meeting since trade talks between their countries collapsed in May.  
  
"It's absolutely possible ... We have to get a good deal," Trump said in an interview with Fox Business Network. "It's possible that we'll make a deal but I'm also very happy where we are now."  
  
Versus the Japanese yen, dollar initially gained to 107.50 in Asia on usd's strength and despite retreating to 107.37 at European open, price jumped to 107.71 on U.S.-China Trade optimism after U.S. President Donald Trump said it's possible for deal with China's Xi to avoid more tariffs and then edged higher to 107.75 at New York open and later hit session highs of 107.84 due to rising U.S. yields.  
  
Although the single currency moved narrowly in Asia and European morning after Tuesday's fall from a fresh 3-month peak of 1.1412 to 1.1345, price found renewed buying at 1.1348 in New York morning and climbed to session highs of 1.1390 on cross-buying in euro especially vs yen before retreating.  
  
In other news, Reuters reported Italy aims to clinch a deal with the European Commission over its contested public finances without setting a new goal for next year's budget deficit, a senior government source told Reuters.   
  
The government will cut this year's deficit target to 2.0% or 2.1% of gross domestic product in the next few days, from a 2.4% goal set in April, and hopes this will go a long way to satisfying the Commission, said the source who asked not to be named.   
  
For next year, the coalition of the anti-establishment 5-Star Movement and the right-wing League is reluctant to commit to a new target, but will instead promise to cut public spending and scrap many existing tax breaks, the source said.  
  
The British pound remained under pressure in Asia and dropped to session lows at 1.2664 in European morning on usd's strength before staging a brief rebound to 1.2707 and later traded broadly sideways in subdued New York session.  
  
Data to be released on Thursday :  
  
Japan retail sales, New Zealand NBNZ business outlook, NBNZ own activity, Italy MFG business confidence, consumer confidence, trade balance, EU business climate, economic sentiment, industrial sentiment, services sentiment, consumer confidence, Germany CPI, HICP, Canada average weekly earnings, and U.S. GDP, PCE, pending home sales, KC Fed manufacturing index.