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US-China Phase One Trade Talk Elevating Market Optimism

USD - United States Dollar

A quiet day and overnight in the US session overall for currency pairs, with the US Dollar Index climbing higher on the back of reports that China is planning to raise penalties on intellectual property (IP) violations. WTI crude oil moves higher in trading to start the week from 57.22 to the current price of 58.13 a barrel. Optimism in the US-China trade saga with the introduction of Phase One seemingly imminent is also pushing gold lower over the past four trading sessions. Hopes of the deal between the two trading Titans rose after China said it was stepping up police intelligence efforts to combat IP theft. Intellectual Property (IP) has been a central focal point in the trade war treaty, so China's efforts to step up security in this area is seen as a significant hurdle to overcome for a resolution. Risk was "on" for most of the day yesterday. US stocks rallied on the hopes for a US-China Phase One trade deal can be met before Dec 15th when new tariffs are expected to be raised. Other than that, headlines were light with China summoning the US Ambassador to complain about the recent Hong Kong bill passed through the senate (yet to be signed officially by Trump). Market reaction to the downside was limited on the headline with US equities outperforming and US Treasury yields dipping.
Lots of US economic data for market participants to digest today with Wholesale Inventories, Goods Trade Balance, Case-Shiller Home Price Index, Richmond Fed Manufacturing Index, New Home Sales M/M for October, and Consumer Confidence all released today.

Key Movers

Earlier on in the Europe Session, EURUSD continues to disappoint bulls and bears, with the French and German PMI's a beat (although from deficient levels), but the Eurozone services a miss. This saw price action briefly rally and reach the highs on the day, with the rally topping out at 1.1030, sitting now at 1.1017. The 1.0990, for now, remains short term support, and if we close below 1.1000 on the break of it, we may see further follow through on a USD flow drive month-end pricing.
New ECB president Christine Lagarde spoke at the end of last week, with nothing market moving, and we have more speakers this week form the ECB's Philip lane, Yves Mersch, Benoît Coeure as well as US Fed's Chairmen Jerome Powell and Lael Brainard.

Expected Ranges

EUR/USD: 1.1007 - 1.1025 ▲

GBP/USD: 1.2850 - 1.2908 ▼

USD/CAD: 1.3300 - 1.3316 ▼

AUD/USD: 0.6767 - 0.6796 ▲

NZD/USD: 0.6405 - 0.6425 ▲