Dollar, Risk Soars as Trump Trade Tease

Dollar, Risk Soars as Trump Trade Tease
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It’s been a rollercoaster ride in FX this week with currencies reacting to every positive and negative headline. Overnight, investors were worried that the Chinese delegation would leave after only one day of talks and even in early morning every one was unclear as to how the primary talks would go. The uncertainty is so high that market watchers resorted to dissecting the body language of every one arriving. By the end of the NY session, the US dollar came roaring back after President Trump tweeted that he will meet "with the Vice Premier tomorrow at the White House." However in the same tweet, he left the market guessing by saying "They want to make a deal, but do I?" With the outcome of the trade talks still unknown, there could be more fireworks in the next 24 hours. If President Trump agrees to a partial deal with China, USDJPY will make a run for its 1-month highs near 108.50. Other major currencies should benefit from risk on flows as well with EUR/USD testing 1.1050 and AUD/USD heading towards .6850. If negotiations fail and China leaves with no agreement, we’ll see today’s gains reverse quickly with USD/JPY and AUD/USD feeling the brunt of the pain. While it may not be wise to bet on a deal, President Trump’s willingness to meet with Vice Premier Liu He is a sign that a positive outcome is likely. It would also effectively distract news agencies from the impeachment inquiry. A trade deal […]

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