Aussie and kiwi gain on trade optimism
Markets were more hopeful on progress in US-China trade talks after an earlier report stating that the two were close to sealing an agreement. I find it to be nothing too new but the headlines were more than enough to give added fuel to equities and risk assets to rally.
The aussie gained on that as well as a better-than-expected retail sales report earlier, with AUD/USD inching above the 0.7100 handle now. Meanwhile, the kiwi is also trading at the highs now as markets are sticking to the risk-on theme.
As a result, the likes of the dollar, yen and swissie are lagging behind. The yen is weighed lower also as bond yields are moving higher with Treasury yields gaining ground across the curve. US 10-year yields are up by 2.7 bps currently to 2.50%.
The pound is seeing a much calmer start to proceedings after recovering overnight following Theresa May's offer of a cross-party compromise to break the Brexit deadlock. Expect more headlines to follow later in the day as parliament is set to debate on Brexit again.
Looking ahead, there will be a slew of PMI data to come from Europe but given that they are final readings the impact should be rather muted. Hence, expect plenty of focus to stay on the risk mood as the ebb and flow takes over trading sentiment today.
