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.  

Trendsetter does not warrant or guarantee the accuracy, timeliness or completeness to its service or information contained therein. Trendsetter does not give, whatsoever, warranties, expressed or implied, to the results to be obtained by using its services or information it provided. Users are trading on their own risk and Trendsetter shall not be responsible under any circumstances for the consequences of such activities. Trendsetter and its affiliates, in no event, be liable to users or any third parties for any consequential damages, however arising, including but not limited to damages caused by negligence whether such damages were foreseen or unforeseen.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD: risk aversion could send it sub-1.1180

EUR/USD capped by a critical Fibonacci resistance for two weeks in-a-row. The American dollar has closed the week on a high note as hopes for significant rate cuts faded.


GBP/USD: bears to retake control on a break below 1.2475

Renewed demand for the greenback has resulted in the GBP/USD pair giving back half of its Thursday’s gains at the end of the week, with the pair closing it just above the 1.2500 figure.


USD/JPY: bearish case firmer once below 107.20

The USD/JPY pair flirted with the 108.00 level by the end of the week on renewed demand for the greenback but retreated sharply from the level to settle at around 107.70.


Something has spooked the Fed

We wish we knew what it is. Wild talk of the US joining Japan and Europe with zero or negative return on the 10-year is or should be very frightening.

Read more

Gold consolidates around $ 1440, eyes US data for fresh direction

Gold (futures on Comex) extends its side-trend around the 1440 mark into the mid-European session, having stalled its retreat from 2019 highs of 1454 near 1437 region.

Gold News