The United States Dollar remained relatively strong in overnight trading despite risk appetites returning to the market. Commodity currencies were the primary beneficiaries of increased risk sentiment with the Aussie, Loonie and Kiwi all posting healthy recoveries against the worlds reserve currency. Across the Atlantic, the Greenback failed to make inroads with the Sterling and Euro which remains mostly unchanged from yesterdays reading. The US Dollar Index (DXY) opens this morning slightly higher at 94.83.
Attentions were again dominated by news on the on-going trade war which had an unexpected turn in overnight trading. China didn’t immediately respond to the news of the extra $200b tariff that President Trump touted. Instead, the market enjoyed headlines suggesting that China and the US would resume trade talks. The effect on markets was almost immediate with capital flowing back into risk assets and commodity currencies enjoying the positive flow. US CPI Inflation data was also released during the American trading session which came in unexpectedly lower at 0.1% for June. Nevertheless, the broader narrative points to a healthy economy with Inflation on an annual basis rising to 2.9%, the fastest growth since early 2012.
Closing out the week is a mild economic calendar with little to excite foreign exchange markets. Again, traders will turn their attentions to the headlines and look for clues on any developments in the trade war.