Hopes of progress in the US-China trade talks kept the safe-haven Japanese yen on the defensive and continued benefitting trade-sensitive Australian and the New Zealand Dollar. The British Pound remained well supported by renewed Brexit optimism and the prevalent US Dollar selling bias provided a modest lift to the shared currency during the Asian session on the last trading day of the week.
The US President Donald Trump on Thursday characterized the first day of trade talks between the top US and Chinese negotiators as very good and said that he is planning to meet Chinese Vice Premier Liu He on Friday. Adding to this, a White House official said that the talks had gone probably better than expected and raised the possibility of a currency agreement, as a part of partial trade deal this week.
Meanwhile, the Sterling was the best-performing major currency on Thursday and posted its largest daily percentage gains since March after Irish Prime Minister Leo Varadkar said that a Brexit deal could be clinched by the end of October. Varadkar said that they have identified a potential path forward on the Irish border issue and how to avoid a hard border, paving the way for the resumption of EU-UK Brexit talks on Friday.
On the other hand, the Greenback failed to capitalize on the positive trade-related developments and remained depressed amid increasing odds of further monetary easing by the Fed. Thursday's softer US consumer inflation figures reinforced market expectations that the Fed will cut interest rates again at its upcoming meeting on October 29-30 and kept exerting some downward pressure on the buck.
Main Topics in Asia
President Trump: China talks went very well today, will continue tomorrow
President Donald Trump: We're going to see if we can make a deal with China
President Trump to meet China's Liu He at 18:45 GMT - White House
Brexit: Britain is proposing a "pared-down free trade agreement" to end the Brexit stalemate - Sky News
Federal Reserve's Mester: US is likely to avoid a serious downturn
Key Focus Ahead
In absence of any major market-moving economic releases during the European session on Friday, the incoming headlines from a meeting between Finance Ministers from EU member states might influence the shared currency. Apart from this, Friday's key focus will be on the resumption of EU-UK Brexit talks, which should act as an exclusive driver of the market sentiment surrounding the British Pound. Later during the early North-American session, the release of Prelim UoM consumer sentiment index from the US and Canadian monthly employment details will be eyed for some impetus. This coupled with any fresh trade-related developments might further contribute towards producing some meaningful trading opportunities on Friday.
EUR/USD: Key resistance scaled ahead of Draghi's speech, US-China trade talks pivotal
The European Central Bank (ECB) President Draghi is scheduled to speak at 09:30 GMT. The outgoing President is expected to reiterate his dovish stance. The EUR, however, may show resilience, as the markets seem to have priced in the ECB's recent easing. Also, currently the focus is on the dovish Federal Reserve expectations and the US-China trade talks.
GBP/USD consolidates overnight strong gains to 2-week tops, just below mid-1.2400s
The GBP/USD pair was seen oscillating in a narrow trading band through the Asian session on Friday and consolidated the overnight upsurge to over 250 pips, triggered by renewed hopes that the UK and the EU can reach a Brexit deal. The British Pound turned out to be the best-performing major currency on Thursday after Irish Prime Minister Leo Varadkar said that a Brexit deal could be clinched by the end of October.
USD/JPY adds 20 pips on President Trump's comments
The demand for the anti-risk Japanese Yen (JPY) weakened on the US President Trump's positive trade-related talks, allowing USD/JPY to jump by more than 20 pips. President Trump, while speaking at a campaign rally in Minneapolis, said that trade talks with China are going well and that a deal could be reached. President Trump will be meeting Chinese Vice Premier Liu later today.
Gold steady below $1500's as positive case from geopolitics firm-up
Gold is currently supported in the $1,490-$1,496 tight range in Asia, despite an informal confirmation from Trump, speaking at a campaign rally, boasting how well trade talks are going with China. Risk has rallied yet Gold is at a standstill ahead of highly anticipated high-level trade talks later today in Washington when Trump and Vice Premier Lui finally meet.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0800 after upbeat US data
EUR/USD stays under modest bearish pressure and trades near 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.