Mixed signals on the likely US-China Phase One trade deal kept the investors on the edge in the early session on Wednesday. The recent reports cited a threat to the Phase One trade agreement and therefore, the risk sentiment somewhat soured, with US Treasury yields back in the red. The Wall Street futures also witnessed caution trading, as the Asian equity markets pared early gains.
The US dollar retreated from multi-day tops across its main competitors, tracking the pullback in the Treasury yields. The US yields rallied hard on Tuesday following a big beat on the US ISM Non-Manufacturing PMI release and trade optimism. Most majors attempted a recovery, as the USD bulls took a breather. However, the gains were limited by receding optimism on the US-China trade deal.
USD/JPY flirted with the 109-handle following a drop from near 109.20 region despite weaker Japanese Services PMI data and dovish BOJ minutes. Meanwhile, EUR/USD and Cable are trading almost unchanged on the day, with the Fiber hovering around 1.1075 region while the latter trades in the familiar range below the 1.29 handle, as markets await the key German Factory data and Brexit updates.
The EUR macro calendar today is likely to be dominated by the Eurozone and German Services PMI readings that will drop in around 09:00 GMT. Also, the ECB-speak and Eurozone Retail Sales will offer some trading incentives to the market, as all eyes remain focused on US-China trade-related developments and UK political drama heading into the December 12 general election. The UK docket remains data-empty after the release of the PMI report earlier this week.
In the NA session, the speeches by the US Federal Reserve (Fed) officials Evans and Williams will be closely eyed, in absence of relevant first-tier macro news from the US.
Oil prices have been holding onto gains with WTI trading around $57. EIA weekly Crude Stocks data are due for release at 15:30 GMT.
Oil kicked-off the brand-new week on a positive note, hitting fresh five-day highs at 56.41. But backed-off quickly amid a lack of fresh catalysts and holiday-thinned markets, as Japanese markets are closed on a National holiday.
Gold edged higher on Wednesday and recovered a part of the overnight sharp fall to three-week lows, albeit seemed struggling to capitalize on the attempted bounce. The US Dollar remained well supported by growing optimism over a possible US-China trade deal later this month and was one of the key factors weighing on Gold.