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Trade jitters lingered for the first half of the New York session as the POTUS and EC President Juncker discussed tariffs. Before the closing bell tolled, reports that both sides agreed to hit the pause button on tariffs led to a huge sigh of relief in the markets.

The dollar and the yen returned most of their recent risk-off gains while the euro and commodity currencies cheered the truce.

  • Trump and Juncker agree to resolve trade disputes and reduce barriers
  • Trump: EU and U.S. to begin a “dialogue to reduce differences on regulatory standards”
  • Juncker: EU to increase purchases of LNG and soybeans
  • U.S. new home sales down from 666K to 631K in June vs. 669K forecast
  • U.S. EIA crude oil inventories down by 6.1M barrels vs. expected 2.6M drop

Major Events/Reports:

Juncker and Trump call a truce

Fears of a full-blown trade war between the EU and the U.S. were swept under the rug after President Trump and European Commission President Juncker concluded their sit-down with a trade truce.

Both leaders agreed to hold off any further tariffs while trade negotiations are ongoing, with Trump declaring:

“We agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods.”

Recall that both sides had been exchanging threats to impose higher tariffs on each other’s products a few weeks back, but Juncker assured:

“I had one intention today, to make a deal, and we made a deal. We have a number of areas on which to work together.”

Although neither Trump nor Juncker gave clear details on their next moves, it seems that the EU’s promise to buy more liquefied natural gas (LNG) and soybeans from the U.S. was enough to tide risk-hungry traders over.

Furthermore, both leaders also pledged to resolve the tariffs on steel and aluminum products earlier on.

Return of risk-taking

All eyes and ears were on the Trump-Juncker meeting, so it’s no surprise that markets had a pretty strong reaction to the “very big day for free and fair trade.”

U.S. equities closed in the green, despite a few earnings misses from Facebook, AT&T and General Motors.

  • Dow 30 index is up 172.16 points to 25,414.10 (+0.68%)
  • Nasdaq is up 91.47 points to 7,932.24 (+1.17%)
  • S&P 500 index is up 25.67 points to 2,846.07 (+0.91%)

Commodities and bitcoin are also higher as traders dumped safe-havens for riskier holdings.

  • Gold is up $8 to $1,232.01 per troy ounce
  • WTI crude rose $0.91 to $69.39 per barrel
  • BTC/USD climbed to $8,254.50

Major Market Mover(s):

EUR

The shared currency raked in huge gains as the anxiety from the earlier sessions faded and bulls charged on the positive trade news.

EUR/USD ticked up from 1.1663 to a high of 1.1740, EUR/JPY popped up to the 130.00 handle, EUR/GBP recovered from a low of .8873 to a high of .8895, and EUR/CHF climbed to 1.1630.

Commodity currencies

What’s risk-taking without a rally in commodity currencies? The Aussie, Kiwi, and Loonie bagged wins late in the session on easing trade tensions.

AUD/USD is up to .7458, USD/CAD is down to 1.3034, and NZD/USD recovered to .6845. AUD/JPY bounced from 82.09 to 82.81, CAD/JPY surged to the 85.00 handle, and NZD/JPY is up to 75.88.

Watch Out For:

  • 1:30 am GMT: Australia’s import prices q/q (dip from 2.1% to 1.9% expected)