The overnight optimism over the US-China trade talks faded in Friday’s early trading after reports hit the wires that the trade talks saw little progress and the higher US tariffs on the Chinese imports kicked-in. The US-China trade developments will continue to overshadow the impact of the economic releases today, despite being a heavy-data showing, all eyes remain on the Day 2 of trade talks between the Chinese Vice-Premier Liu He and the US top diplomats.

The safe-haven Yen picked-up fresh bids amid a drop in the US S&P 500 futures on renewed trade jitters, dragging USD/JPY back towards the 109.50 level. The spot struggled to hold the corrective bounce above the 110.00 seen in early trades.

EUR/USD traded well bid above the 1.12 handle, benefiting somewhat from the advance in gold prices, while GBP/USD turned negative and tested the 1.3000 level heading into further cross-party Brexit talks and Day 2 of US-China trade negotiations.

The EUR calendar will kicked-off with the German trade and current account data at 06:00 GMT. From the UK docket, we have a raft of key macro releases due at 08:30 GMT, including the GDP figures, trade balance and industrial production.

Meanwhile, the NA calendar also remains a hectic one, with the US inflation data, due at 12:30 GMT, to headline. Later, the Baker Hughes oil rigs count data will drop in at 17:00 GMT, soon followed by the US monthly budget statement at 18:00 GMT.

Oil prices trimmed earlier gains on Friday following U.S. President Donald Trump's tariff increase on $200 billion worth of Chinese goods took effect, escalating the trade dispute between the world's two biggest economies and oil consumers. Oil prices along with most risk assets are moving almost in sync on trade tariff updates.

Gold is struggling to hold onto gains amid two-way business in related markets, as the US-China trade negotiations have been extended to Friday, offering hope of a last-minute deal. The US, however, is going ahead with the planned tariff hike on Chinese goods, forcing markets to consider the possibility of trade discussions again ending with no deal.