Risk Assets Rally On Trump Comments

Dollar Down on Risk Recovery

USD has been under a little pressure over the European session so far on Tuesday. This comes on the back of higher levels in equities after Trump’s turn at the G7 meetings yesterday. Following rising tensions over the weekend, Trump praised Chinese premier Xi as a “great leader” and said that he was confident the two sides could deliver a “great deal”, saying that negotiations would start again very shortly. USD index trades 97.83 last.

EUR Down On ECB Easing Expectations

EURUSD has been a little weaker so far today, despite softness in USD. The market is widely expecting the ECB to announce a package of easing measures when it meets in September. Worsening global growth, as well as a dovish shift across most of the G10 central bank space,  is keeping expectations elevated. This is putting pressure on EUR. EURUSD trades 1.1103 today, having moved back below the 1.1112 level.

Brexit Hopes Boost Pound

GBPUSD has been back on a better footing today with price continuing to rally amidst quiet hopes that a no-deal Brexit can be prevented. Opposition MPs are working on measures to help avoid allowing Johnson to force through a no-deal. GBPUSD trades 1.2265 last as the recovery back towards the 1.2382 level continues.

Risk Sentiment Bounces Back

Risk assets have been a little muted so far today following a rally yesterday in response to Trump’s comments. After China announced fresh 10% tariffs on $75 billion of US goods at the end of last week,and Trump’s initial response of threatening to remove US companies from China, the market was buoyed by a calmer tone from Trump yesterday. SPX500 trades 2880.73 last following a firm rally off the 2825.30 level.

Safe Havens Soften

Safe havens have had a weaker day today on the back of Trump’s comments yesterday and subsequent recovery in risk appetite, leading both JPY and gold lower against USD. XAUUSD trades 1530.72 last, with price holding above the 1530.57 level for now. USDJPY trades 105.81 last, with price having recovered back from yesterday’s dip below the 2018 lows of 104.63 which saw price trading its lowest levels since 2016.

Crude Boosted By Better Risk Appetite

Oil prices have stabilized further today as price continues to work back the declines of last week. Positive sentiment around the prospect of a US-China trade deal is helping underpin prices here with crude trading 54.21 last. Later today we have our first look at inventory levels over the prior week with the release of the API report.

Commodity Currencies Recover

USDCAD has collapsed further today in light of the recovery in risk appetite and stronger oil prices. The rejection from the 1.33 level has seen price trading all the way back to 1.3236 last, sitting just above the next big support level down at the 1.3207 level.

AUDUSD continues to remain tightly wound within the block of consolidation which has formed around the .6758 level. Price managed to recover sharply yesterday following an earlier downside move and any further optimism around US-China trade talks could help lift AUD more.