• The euro ceded its gains on Tuesday as robust but lower-than-expected business growth data did not alter market expectations that rates in the United States and the euro zone will continue to diverge.
The euro was trading 0.06 percent lower at $1.1684 after hitting an intraday high of $1.1717, Reuters data showed.
• IHS Markit’s Euro Zone Composite Flash Purchasing Managers’ Index, seen as an indicator of economic health, showed slower-than-expected growth.
The PMI data was “certainly not strong enough to bring forward the timeline for an eventual rate hike for the (European Central Bank), but also probably not weak enough to push that timeline out any further,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
• With the U.S. central bank likely to raise interest rates at least twice more this year and the ECB unlikely to raise interest rates until the second half of 2019, traders remained cautious about the outlook for the euro.
• In currencies, the dollar index, which tracks the U.S. currency against a basket of peers, was mostly steady at 94.608. The U.S. dollar was lower against the euro and five other major currencies. Against the Japanese currency, the greenback JPY= fell 0.14 percent to 111.18 yen.
• The British pound gained on news that Prime Minister Theresa May would lead negotiations on the country’s departure from the European Union.
“It helps remove some of the uncertainty over the outcome of Brexit,” said Sireen Harajli, currency strategist at Mizuho Corporate Bank in New York.
Sterling was up 0.36 percent against the dollar at $1.315. The currency has declined nearly 6 percent since late April.
• The Trump administration on Tuesday said it will use a Great Depression-era program to pay up to $12 billion to help U.S. farmers weather a growing trade war with China, the European Union and others that the president began.
It is a clear signal the U.S. President Donald Trump is determined to stick with tariffs as his weapon of choice in the conflict.
• Reports that North Korea has started dismantling facilities at a rocket test site are consistent with a commitment Pyongyang made at a summit last month, but it must go further and fully denuclearize, U.S. Secretary of State Mike Pompeo said on Tuesday.
American officials expect North Korea to hand over around 50 sets of remains in coming days or weeks, but the drawn-out process of negotiations to get to this point highlights the complications involved in the issue.
At the heart of the difficulty, former officials involved in previous recovery missions say, are likely demands from North Korea for cash compensation, as well as the unsolved tensions over North’s nuclear weapons and ballistic missile arsenal.
• Republicans who control the U.S. Congress are hesitating to advance tough new Russia sanctions legislation as fears of damage to American companies slow efforts to quickly send Moscow a message against meddling in the next U.S. election.
Unlike a year ago, when Congress worked with lightning speed on a sanctions law targeting Russia, North Korea and Iran, some lawmakers said on Tuesday the Senate and House of Representatives were carefully weighing their response to growing fears that Moscow is plotting to interfere in November’s congressional elections.
• U.S. President Donald Trump on Tuesday kept open the possibility of negotiating an agreement to denuclearize Iran, two days after he rattled his saber at the nation on Twitter.
“We’ll see what happens, but we’re ready to make a real deal, not the deal that was done by the previous administration, which was a disaster,” he said during a speech to the Veterans of Foreign Wars.
• U.S. President Donald Trump told Mexico’s President-elect in a letter that a quick renegotiation of the North American Free Trade Agreement (NAFTA) would bring more jobs for both countries, but warned of a “very different” path otherwise.
• Oil prices rose on Tuesday as the market shifted focus to the possibility of increased Chinese demand, drawing attention away from oversupply worries and trade tensions between China and the United States.
Brent crude settled 38 cents higher at $73.44 a barrel, after it reached a session high of $74.
U.S. West Texas Intermediate (WTI) settled up 63 cents, or nearly 1 percent, to settle at $68.52. Earlier in the day, WTI reached a high of $69.05.
• Reports that China will increase infrastructure spending helped lessen fears that U.S.-China trade tensions will reduce the country’s demand for oil, said Phil Flynn, analyst at Price Futures Group in Chicago.
“That’s going to be very bullish for oil demand,” Flynn said. “Infrastructure spending from China in the past had really jacked up oil demand, and I think that’s adding some outside support for prices.”
Reference: Reuters, CNBC
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