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Dollar domination was extended to the New York trading session as U.S. bond yields ticked higher again. The lower-yielding yen was forced to retreat while sterling fought to stay afloat.

  • Canadian foreign securities purchases up from 4.32B CAD to 6.15B CAD
  • Canada’s ADP non-farm employment change at 30.2K vs. 59.3K previous
  • U.S. initial jobless claims at 222K vs. 216K consensus, 211K previous
  • Philly Fed index rose from 23.2 to 34.4 vs. 21.1K forecast
  • U.S. CB leading index posted another 0.4% gain as expected

Major Events/Reports:

China trade deal rumors

Market participants have been keeping close tabs on U.S. trade talks with China, and rumor has it that a $200 billion deal may be in order.

The New York Times reported that Chinese negotiators are ready to make an offer that Trump can’t refuse, citing:

“Under the deal being discussed, China would pledge to buy substantially more American agricultural products, including soybeans, as well as semiconductors and natural gas.”

The article went on to point out that this could reduce the surplus with the U.S. by up to $200 billion, after hitting $372.5 billion last year. In exchange for this, China would likely ask for tariffs on its companies to be scrapped.

However, the Donald dashed hopes of seeing a deal struck soon as he remarked ahead of a closed-door meeting with Vice-Premier Liu He that the U.S. has been “ripped off by China.”

He also accused Chinese President Xi Jinping of influencing North Korean leader Kim Jong-Un, adding that they will move on if the highly-anticipated meeting doesn’t take place.

Stocks dip, bond yields up

U.S. equities didn’t take Trump’s comments on China lightly, fearing that trade tensions could still escalate if neither side backs down.

  • Dow 30 index closed 54.95 points down to 24,713.98 (-0.22%)
  • S&P 500 index is down 2.33 points to 2,720.13 (-0.09%)
  • Nasdaq is down 15.82 points to 7,382.47 (-0.21%)

Mostly upbeat medium-tier data from Uncle Sam helped support U.S. bond yields, though, as Fed tightening expectations are still in place for next month.

  • U.S. 5-year bond yield is up to 2.943% (+0.36%)
  • U.S. 10-year bond yield is up to 3.119% (+0.31%0
  • U.S. 30-year bond yield is up to 3.252% (+0.18%)

Gold was mostly unchanged for the session while crude oil still tried to squeeze out a few gains.

Major Market Mover(s):

GBP

The pound managed to rebound from its tumble in the earlier trading session as it was later on rumored that the U.K. could keep applying EU external tariffs for a time-limited period beyond December 2020.

GBP/USD bounced from a session low of 1.3474 to a high of 1.3527, GBP/JPY recovered to 149.85, EUR/GBP dipped to .8726, and GBP/AUD crawled its way back to the 1.8000 mark.

JPY

Rising U.S. bond yields made the dollar the preferred safe-haven currency, leaving the lower-yielding yen to slide to the bottom.

USD/JPY climbed from 109.87 to 110.46, EUR/JPY is up to 130.83, NZD/JPY ticked up from a low of 76.07 to 76.10, and AUD/JPY is back up to 83.25.

CAD

The Loonie was also on the losing end as remarks from U.S. NAFTA negotiator Lighthizer on how the nations are “nowhere near a deal” weighed on the currency.

USD/CAD rose from 1.2779 to a high of 1.2821, CAD/JPY is down to 86.39, EUR/CAD popped up to 1.5141, and GBP/CAD found support at 1.7235 to climb to 1.7306.

Watch Out For:

  • 11:30 pm GMT: Japanese national core CPI y/y (0.8% expected, 0.9% previous)