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The U.S. dollar bounces along equity markets and positive news from the U.S. - China trade deal

USD - United States Dollar

The U.S. dollar index rises by 0.23 percent along with the equity market due to very positive news from the U.S. - China trade deal (see below). The EUR/USD pair falls 0.37 percent. For now, an oversold Greenback is ignoring economic data, and it is following the "risk-on" mood. Yesterday, economic data showed that U.S. factory orders declined -0.6 percent, the worst drop in 4 months in September. The data confirmed investor fears that the U.S. was still experiencing a slump in the manufacturing sector amid the ongoing U.S. – China trade dispute.

Key Movers

U.S. and Chinese officials are actively considering rolling back some tariffs to assure the partial trade deal under negotiation. Furthermore, President Xi Jinping echoed China's commitment to the global trading order in Shanghai, where he said the country would, "…continue to lower tariffs and institutional transaction costs." He added, "…we must all put the common good of humanity first rather than place one's interests above the common interests of all." He didn't mention the current negotiations with the U.S. or with Trump.

The U.S. - China negotiations continue with optimism, and a phase-one deal might be ready for signatures in the coming weeks. China wants the U.S. to roll back tariffs on $360 billion of its imports before President Xi Jinping agrees to travel to the U.S. to sign a partial trade deal. At the same time, China may remove levies on U.S. goods, mostly farm products.

In China, the central bank reduced the cost of one-year funds for banks (for the first time since 2016) to calm nerves about tightening liquidity. The USD/CNH pair (Greenback versus Yuan) fell 0.47 percent, breaking the psychological support of 7.00 (stronger Yuan).

Australia held rates unchanged at 0.75 percent as expected, but left the door open to further easing if needed. The RBA is expecting inflation to gradually pick up, holding at around 2 percent over 2020 and 2021 with growth picking up modestly to about 3 percent in 2021. Westpac Chief Economist Bill Evans wrote in a note regarding the RBA decision, “…there is nothing in this statement that prompts us to revise our current forecast that rates will be on hold in December with the next and final rate cut occurring in February next year." The AUD/USD pair is increasing 0.42 percent at the time of this writing.

Expected Ranges

USD/CAD: 1.3118 - 1.3163 ▼

EUR/USD: 1.1069 - 1.1120 ▼

GBP/USD: 1.2842 - 1.2924 ▼

AUD/USD: 0.6875 - 0.6913 ▲

NZD/USD: 0.6390 - 0.6415 ▼