Forex today experienced cautious optimism, as markets reassessed the renewed hopes on the US-China trade front, as both the trade teams look to meet in-person next month amid looming additional US tariffs. Also, escalating Hong Kong protests somewhat weighed on the market sentiment.
The Asian stocks tracked Wall Street’s risk-on rally and hit weekly tops while S&P 500 futures held onto moderate gains. The US Treasury yields, however, failed to extend the upside amid lingering US recession fears.
The Yen, managed to recover some ground vs. the greenback, as USD/JPY traded on the back foot near 106.50 levels. Heading into Europe, the EUR/USD pair traded weaker below 1.1050 amid increased European Central Bank (ECB) stimulus bets while the Cable posted small losses below 1.2200 amid looming Brexit risks.
Friday’s EUR macro calendar remains a busy one, with focus at the key Eurozone July employment and August Preliminary Consumer Price Index (CPI) figures will be reported at 09:00 GMT. A softer inflation print is likely to bolster the ECB stimulus calls and drag EUR/USD down to 1.1000 key support. Meanwhile, the sentiment across Europe will be also driven by fresh Brexit/ UK political developments amid a few data points from Italy.
The NA session sees the US Core Personal Consumption Expenditure (PCE) Price Index for June and Personal Spending data, all of which will be released at 12:30 GMT. Traders also look forward to the US Michigan Consumer Sentiment Index and Baker Hughes US Oil Rig Count data due at 14:00 GMT and 17:00 GMT respectively.
Despite a busy docket, the risk sentiment will likely remain at the mercy of any fresh US-China trade headlines and US President Trump’s comments, as we head into a monthly close.
Gold prices consolidated the overnight decline around $1,525, as the US dollar continued to hold firmer across the board while Oil has been climbing on the charts and is now well placed for higher levels.