· The U.S. dollar slipped to near a two-week low on Tuesday after the U.S. and the European Union agreed steps to avoid trade war, easing immediate global trade tensions.
The U.S. dollar index, which tracks the greenback against a basket of currencies, slipped 0.1% to 93.96 at 1:19AM ET (05:19 GMT). The index touched a fresh two-week low earlier in Asia trading.
"The dollar is broadly weaker against currencies including the Chinese yuan, as trade tensions have eased," said Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo.
"The United States and the European Union have seemingly declared a truce and hopes are that NAFTA talks and deals with China would be positive as well."
Meanwhile, Chinese President Xi Jinping reiterated at the BRICS summit in Johannesburg on Wednesday that a global trade war would have no winner, and the people supporting it “will only end up hurting themselves.”
The euro nudged 0.1% stronger to $1.1735 ahead of the European Central Bank’s July meeting due later in the day. The ECB is largely expected to keep policy on hold.
Elsewhere, Japanese government bonds remained in focus ahead of the Bank of Japan’s meeting next week. The USD/JPY pair slipped 0.2% to 110.74, as the yen set to mark its seventh consecutive day of gains against the dollar.
· U.S. Treasury yields also remained elevated, pushed higher by the outcome of the Juncker-Trump meeting. The yield on 10-year notes was at 2.9690 percent, compared with its U.S. close of 2.936 percent on Wednesday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, was at 2.6694 percent compared with a U.S. close of 2.657 percent.
· After a surprisingly dovish meeting in June, the European Central Bank (ECB) is expected to strike a more balanced tone this week, given heightened uncertainties for the global economy.
The focus will be on the ECB‘s assessments of these risks at its meeting Thursday, with investors concerned of the acute risk of a trade war escalation.
“We expect (ECB President) Mario Draghi to aim for a ‘Goldilocks’ tone at the July 26 press conference — not too hawkish, not too dovish,” said Mark Wall, the chief economist at Deutsche Bank, in a research note.
“The ECB only recently made a commitment to unchanged rates for the next year to lean against trade and volatility risks and avoid an unwarranted tightening of financial conditions.
· Global economic activity remains solid but has already passed its peak, according to economists in Reuters polls who expect protectionist policies on trade, which show no signs of abating, to tap the brakes significantly.
While trade conflict between the United States and other major trading partners, in particular China, has had only a modest impact on global trade and the world economy so far, the turmoil in financial markets clearly suggests confidence has taken a hit.
· U.S. Secretary of State Mike Pompeo on Wednesday vigorously defended President Donald Trump’s foreign policy actions as senators from both parties denounced Trump’s behavior, particularly at his recent summit with Russia’s Vladimir Putin.
Pompeo faced tough questioning from Democrats and Republicans during testimony before the Senator Foreign Relations Committee about Trump’s failure to hold the Russian president accountable for Moscow’s meddling in the 2016 U.S. election at their meeting in Helsinki last week.
· Washington’s reluctance to declare an end to the Korean War until after North Korea abandons its nuclear arsenal may put it at odds not only with Pyongyang, but also with allies in South Korea.
The 1950-1953 Korean War ended in an armistice rather than a peace treaty, leaving the U.S.-led United Nations forces technically still at war with North Korea.
· North Korea will transfer the remains of an unspecified number of soldiers killed in the Korean War on Friday, South Korea’s Yonhap news agency reported, after accepting about 100 wooden caskets sent by the United States.
· Chinese police took away a woman who sprayed herself with gasoline on Thursday in what was suspected to be a self-immolation attempt outside the U.S. Embassy, the state-run Global Times reported, amid reports of an explosion.
Reuters could not immediately verify the report, but witnesses told Reuters that they heard an explosion near the U.S. Embassy and felt tremors. One of the witnesses said there were seven to eight police vehicles near the embassy.
· Brent crude led oil prices higher on Thursday, extending gains into a third day after Saudi Arabia suspended crude shipments through a strategic Red Sea shipping lane and as data showed U.S. inventories fell to a 3-1/2year low.
Brent crude futures had risen 42 cents, or 0.6 percent, to $74.35 a barrel by 0648 GMT, after gaining 0.7 percent on Wednesday.
U.S. West Texas Intermediate crude futures were up 5 cents at $69.35 a barrel, after climbing more than 1 percent in the previous session.
· Crude oil jumped above the 69.00 resistance this Wednesday and is currently consolidating below the 69.44 resistance as the EIA Crude Oil Stocks change to July 20 came at -6.147 million versus -2.331 million; which is considered as bullish.
Crude oil has confirmed the bullish bias and bulls are now looking at the 70.53 and 71.19 as next targets. Supports are seen near 69.00 and 68.30 levels.
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