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Analysts at Westpac explained that there are suggestions that China might be more willing to allow yuan depreciation as one trade weapon against the US.  

Key Quotes:

“The US dollar rose against a wide range of currencies, with weakness in the Chinese yuan notable given US-China trade tensions.”

“The greenback  gained against all G10 currencies, starting in late Sydney/early London trade, without an obvious catalyst.”

“EUR fell from 1.1720 to 1.1635. German chancellor Merkel downplayed hopes for a deal on immigration at this week’s EU leaders summit. USD/JPY rose from 109.40 to 110.22. AUD fell from 0.7420 to 0.7380/90. NZD fell from 0.6900 to 0.6847, the kiwi weakest in the G10 on the day ahead of the RBNZ decision Thursday. AUD/NZD rose from 1.0750 to 1.0795.”

“AUD held up better than most in the G10, only a touch softer at 0.7390. Data and headlines had little apparent effect, while US yields and equities saw limited change. The regional calendar is low key, ahead of US May durable goods orders and inventories data. Fed officials are due to speak again

.””US consumer confidence eased in June, the Conference Board’s index falling to 126.4 from an upwardly revised 128.8 in May, just a shade below February’s seventeen-year highs. The components reveal households remain very upbeat about current conditions while the expectations sub-index for the future reveals a touch of caution, falling to their lowest levels since December 2017.”

“The June Richmond Fed manufacturing index rose to a four-month highs of 20 from 16, ahead of expectations, with prices and employment plans firming. The 20-city index of US house prices from S&P and CoreLogic rose 6.6%yr, a little less than expected.”

“The US 10yr treasury yield ranged sideways between 2.86% and 2.90%, while 2yr yields ranged between 2.52% and 2.55%. Fed fund futures yields continued to price 1 ½ more hikes in 2018.”