- Positive vibes in the U.S. session help lift the Dollar and US stocks higher.
- All eyes look to next week's trade talks between the US and China.
Forex today was trading in a more risk-positive environment following reports confirming that U.S. negotiators were headed to meet their Chinese counterparts next Monday. There was also news of the announcement that a White House and Congressional deal on the federal budget and debt ceiling had been secured.
Consequently, US stocks ended higher, supported by positive corporate earnings. The Dow ended up 177 points at 27,349, while the S&P 500 index added 20 points to 3,005 and the Nasdaq Composite Index put on 47 points to close at 8,251.
With a flight to stocks, the U.S. 2-year treasury yields climbed from 1.82% to 1.84%, while 10-years moved 3 basis points higher from 2.04% to 2.07%. Consequently, the U.S. Dollar index continued to inch higher and was up 0.5% on the day, outperforming all the majors as trade and debt ceiling risks receded.
"US Trade Representative Robert Lighthizer and senior U.S. officials plan to travel to China next Monday for the first high-level, face-to-face trade since talks broke down in May. US President Trump announced a bipartisan deal to suspend the debt ceiling and boost spending levels for two years, averting the risk of a payment default,"
analysts at Westpac confirmed.
Prior to the U.S. session, the focus was on UK markets and the British Pound following Boris Johnson's selection by the Conservatives to become the new leader, thus stepping into No10 Downing Street as PM on Thursday. However, the prospects of a hard-Brexit continued to weigh on the pound.
GBP/USD: Offered on Boris Johnson's appointment to UK PM and hard Brexit hysteria
Currency action
GBP/USD traded between a range of 1.2481 and 1.2417, morphed into a tighter range as the day progressed around current levels of between 1.2430/39. The euro was under pressure from 1.1195 to 1.1146 which as a two month low for EUR/USD as investors switch concerns over to US/EU trade relations. USD/JPY climbed from 108.00 to 108.29 as investors pilled back into risk assets and the Aussie dropped from 0.7035 to 0.6996 on Dollar strength. However, following yesterday's QE noise surrounding the RBNZ, the Kiwi was the worst performer in the G10 space and it fell from 0.6740 to 0.6703.
Key notes from Wall Street:
Wall Street turns around on Tuesday on positives all around
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.