· The dollar traded below a five-month high against a basket of currencies on Tuesday, catching its breath after a broad rally inspired by rising U.S. bond yields and relief at an easing of U.S.-China trade tensions.
The dollar’s index against a basket of six major currencies last traded at 93.564, down from a five-month high of 94.058 set on Monday.
The U.S. 10-year Treasury yield last stood at 3.0523 percent , down from Friday’s near seven-year high of 3.128 percent.
Against the yen, the dollar eased 0.1 percent to 110.89 yen, down from Monday’s four-month high of 111.395 yen.
· In opinion of Karen Jones, Head of FICC Technical Analysis at Commerzbank, the pair’s stance is cautious, while a rebound is likely.
Key Quotes
“EUR/USD has sold off to the December 2017 low where it is holding. It has not yet closed below its 78.6% retracement at 1.1767 and we note the 13 count, all of which suggest extreme caution and a likely rebound. The market stays immediately offered below the accelerated downtrend at 1.1853 but will have very little impact while below the 1.1996 14th May high”.
“A close below 1.1712 will target the 1.1616 May 2016 high and then the 1.1553 November low with the 200 week ma at 1.1442 our ultimate goal”.
“The 200 day ma at 1.2021 guards the 1.2092 September 2017 high and the 1.2155 March low and while capped here we maintain an immediate bearish bias”.
· Atlanta Federal Reserve Bank President Raphael Bostic said on Monday the U.S. economy is close to meeting the Fed’s employment and inflation goals, with growth of around 2.5 percent expected this year.
· Washington and Beijing are nearing a deal that will remove an existing order banning U.S. firms from supplying telecommunications firm ZTE Corp (000063.SZ) (0763.HK), two people briefed on the talks said.
The sources, who declined to be identified because the negotiations were confidential, also told Reuters the deal could include China removing tariffs on imported U.S. agricultural products as well as buying more of them.
· Triumphant tones coming from the White House over the weekend are inconsequential, Moody's chief economist said Monday, deflating hopes that the U.S. is gaining major ground in its negotiations with China aimed at averting a trade war.
"I think it's a lose-lose. There are no winners here," Mark Zandi told CNBC's "Squawk Box Europe" on Monday. "This is face-saving, because clearly they're not going come to terms on anything — at least, not in the near-team."
· Russian President Vladimir Putin bragged earlier this year that his country had a new nuclear-powered missile with unlimited range — but it has yet to perform a successful test over multiple attempts, according to sources with direct knowledge of a U.S. intelligence report on the weapons program.
· Bank of Japan Governor Haruhiko Kuroda said the central bank will telegraph to markets how it plans to exit from ultra-easy policy when conditions for hitting its price goal become robust.
But he said it was premature to debate when the BOJ could whittle down its massive stimulus programme, with inflation distant from its 2 percent target.
Bank of Japan Governor Haruhiko Kuroda said on Tuesday that U.S. and most European central banks are “extremely cautious” of the idea of issuing digital currencies as substitutes for cash.
The BOJ itself has no plans to issue digital currencies that can replace cash for use by the general public, he added.
· Oil prices rose on Tuesday, with Brent edging closer to $80 per barrel, on concerns that Venezuela’s crude output could drop further following a disputed presidential election and potential U.S. sanctions on the OPEC-member.
Brent crude futures LCOc1 were at $79.37 per barrel at 0632 GMT, up 15 cents, or 0.2 percent, from their last close. Brent broke through $80 for the first time since November 2014 last week.
U.S. West Texas Intermediate (WTI) crude futures were at $72.45 a barrel, up 21 cents, or nearly 0.3 percent.
Reference: Reuters, CNBC,Bloomberg, FXstreet
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