The dollar was not able to continue with its winning streak as risk appetite recovered a bit after Mark Calabria, chief economist for U.S. Vice President Mike Pence, called Thursday’s trade talks with China “fairly positive”.
Equity Indexes in the US fell initially below their 200-day moving averages, for the second time since June 2016, but the risk-off tone shifted after Calabria comments and the S&P managed to recover more than 1.3% from the lows of the day. Still, markets don’t seem too keen to jump into risk mode, despite pairing losses, stocks still closed in negative territory and US Treasuries gained in price (yields dropping slightly more in the long end of the curve).
On the data front, it felt markets payed special attention to the miss in the ISM non-manufacturing Index, which came at 56.8 versus 58 (expected) and was probably the main catalyst behind the initial sell-off in stocks.
Later tonight we have the always important Non-Farm Payroll number and depending how that goes and where US Yields move from here, we will probably get a clearer picture of what is next for the USD. Additionally, expect more headlines coming from US-China trade talks.