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  • Forex today was once again trading around the trade war noise and subsequent risk appetite on the street.

It was pretty volatile across the financial and commodity markets again while investors trade in and out of the headlines that are flowing ahead of the 11th round of US-China trade talks this week. There was a late report that it could be a shortened meeting   –  Trade wars: Friday tariffs likely on – only be time for one meeting tomorrow between Washington/U.S. trade reps. However, markets remain somewhat optimistic on the margin and all is not lost, so far.

Meanwhile, there were a lack of data catalysts overnight and instead, we will await the U.S. CPI at the end of the week which will likely bring back the Fed trade, although it will also coincide with trade talk updates which could go wildly one way or the other for markets.  

Key currency action (Courtesy of analysts at Westpac Banking Corporation).

  • “EUR/USD is flat on the day, around 1.1190.
  • USD/JPY slipped to 109.90 in Sydney trade as Asian equities slumped but then ranged either side of 110.00.
  • The US dollar firmed against most other major currencies. AUD/USD slipped from 0.7020 late Sydney to 0.6990 late NY.
  • NZD/USD edged back to 0.6570, but remained above the knee-jerk 0.6527 low response to yesterday’s RBNZ cut.
  • AUD/NZD, which very briefly spiked above 1.0700 following the RBNZ yesterday, drifted back to 1.0630 by early Thursday. It seems that the RBNZ’s neutral bias post-cut is helping stem kiwi losses.

Key notes from U.S. session:

  • Wall Street ends more or less flat on trade talk optimism, DJIA bulls not out of the woods yet

Key events ahead:

China releases Apr consumer and producer prices data and all ears on the ground for trade headlines ahead of China VP Liu He returning  to Washington.  Eyes will also be on US April PPI and March trade balance while ed Chair Powell, Evans and Bostic will also be crossing the wires.