The mood across the fx board in Asia this Tuesday remained cautiously optimistic, with the US equity futures advancing amid easing concerns over the US-China trade dispute. Markets breathed a sigh of relief after the US announced to scale back some restrictions on China’s Huawei Technologies. Therefore, the Yen traded on the back foot, sending the USD/JPY pair back towards the two-week tops of 110.32. But further upside lacked momentum amid mixed Asian equities and rising US-Iran geopolitical tensions. In contrast, the Antipodeans failed to benefit from the improved risk tones, as the Reserve Bank of Australia’s (RBA) outright dovish shift dampened the sentiment. The AUD/USD pair stalled its surprise election outcome induced rally and fell sharply below the 0.69 handle after both the RBA May meeting minutes and Governor Lowe hinted at a June rate cut amid concerns over the Australian labor market. The Kiwi also snapped gains and returned to the red zone just ahead of the 0.6500 level. Meanwhile, the Loonie traded flat near 1.3430 levels, unfazed by the renewed uptick in oil prices following the US President Trump’s fresh threats on Iran. Among other commodities, gold futures on Comex traded depressed near 1275, despite the Fed Chair Powell’s comments on the increased bank debt levels. Amongst the European currencies, the EUR/USD pair traded weaker near 1.1150 levels while the Cable remained capped in a tight range below 1.2750 barrier, as markets ignored the latest Brexit optimism. Main Topics in Asia US-China trade updates U.S. Commerce Department scales back restrictions on Huawei – Reuters Huawei’s Founder: US’s temporary reprieve does not mean much for Huawei Other Key Headlines Trump: Iran has been very hostile – WTI pops to $63.39 Asian high Iran’s President Rouhani: “I favor talks and diplomacy but under current conditions I do not accept it.” Powell speech: Comparison of current business debt levels to subprime mortgage crisis “not fully convincing” Powell Speech: Outlook of trade talks is unknown, premature to judge Japan’s Aso: GDP at 2.1% and two quarters of growth is not bad Gold trades quiet in Asia even though Fed’s Powell warns on corporate debt Australia’s re-elected Govt to miss tax break deadline, RBA June rate cut done deal? BOJ’s Kuroda: BOJ is buying bonds to achieve price target RBA minutes: Rate cut would be appropriate if no further improvement in labor market, Aussie turns lower RBA’s Lowe: To consider a rate cut at June meeting, Aussie gives up 0.6900 Key Focus Ahead Heading into Europe, the calendar remains a thin-showing, with the UK CBI industrial orders survey, due at 1000 GMT, only of relevance. Therefore, attention turns towards the US existing home sales due at 1400 GMT. At the same time, the Eurozone consumer confidence numbers will be reported. New Zealand’s GDT price index is also due on the cards around 1400 GMT. Later at 2130 GMT, the API weekly crude stocks data will be published that will offer some fresh impetus to oil prices. Besides the macro data, the speeches by the FOMC members Evans and Rosengren will hog some limelight. Also, developments surrounding the UK political scenario and US-China trade dispute will also continue to influence the fx trades. EUR/USD: Snaps five-day losing streak, 5-day MA capping upside The FX desks may offer US Dollar, helping EUR/USD rise to 1.12 if the risk appetite continues to improve in Europe. That said, Eurozone issues could play a spoilsport. GBP/USD refrains from further declines amid UK’s political optimism Given the latest swift in British politics and lack of data from the UK, investors are more likely to follow qualitative factors concerning Brexit, US-China and US-Iran topics in order to determine near-term trade sentiment. Japan’s Motegi: Japan-US to hold working level trade talks today Japanese Economy Minister Motegi is on the wires now, via Reuters, noting that Japan and the US will hold working-level trade talks today. USD/INR forecast: A majority for BJP-led NDA would be positive for Rupee, but upside limited The USD/INR pair will likely see big losses on Thursday only to bottom out in the next week or two if the BJP-led NDA gets a clear majority as expected. It is worth noting that the BJP victory is being priced in since the end of February. Anti-EU populism rise not priced in the EUR, European election could hit Euro The European Union is holding its Parliamentary election next Sunday May 26th and the impact of this political event seems to be underpriced by currency markets. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next US Dollar Index firmer around 98.00, attention to Fedspeak FX Street 4 years The mood across the fx board in Asia this Tuesday remained cautiously optimistic, with the US equity futures advancing amid easing concerns over the US-China trade dispute. Markets breathed a sigh of relief after the US announced to scale back some restrictions on China's Huawei Technologies. Therefore, the Yen traded on the back foot, sending the USD/JPY pair back towards the two-week tops of 110.32. But further upside lacked momentum amid mixed Asian equities and rising US-Iran geopolitical tensions. 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