Forex today was slightly active following a long weekend, with the dollar picking up a bid and then markets taking heed of Trump's comments with respect to trade with China.
The comments indicating higher tariffs on Chinese goods by the US President Donald Trump initially triggered risk-off sentiment around late-Tuesday, and the mood stretched overnight after Chinese Daily points China’s ability to fight against the US with its rare earth metal stocks, the same was also suggested by various lawmakers from the world’s second-largest economy.
The latest weakness in the US Dallas Fed manufacturing index and Bloomberg expecting soft economic growth from China also added to the risk aversion.
EUR/USD navigates within a range around 1.1170/50 as the Euro struggles for direction while USD/JPY trades in the lows amidst the escalating US-China trade tensions, US-Iran rift and global growth fears weigh on the market sentiment.
Later in the session German labour market report is due along with the 5-year auction and the speech by BuBa’s J.Weidmann. Also, monetary policy meeting by the Bank of Canada will gain market attention.
There isn't any major market moving US economic data due for release on Wednesday and hence, the broader market risk sentiment, driven by fresh trade-related headlines, might continue to act as a key determinant of the market’s momentum.
Oil prices fell on Wednesday on concerns the Sino-U.S. trade war could trigger a global economic downturn, but relatively tight supply amid OPEC output cuts and political tensions in the Middle East offered some support.
Gold benefited amid risk-off sentiment, as fears of a further escalation in the US-China trade tensions underpin safe-haven demand. Gold was weighed down by a modest pickup in the US Dollar demand, however, a sharp intraday slide in the US equity markets extended some support and helped stall the downfall.