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Risk appetite extended its stay, lifting the higher-yielding Aussie and Kiwi, as trade talks between the U.S. and China were set for next week. The Greenback scored gains across the board for the session, though.

  • Canadian manufacturing sales up 1.1% vs. 1.0% forecast in June
  • Canada’s ADP non-farm employment up 11.6K in July
  • U.S. building permits increased from 1.29M to 1.31M as expected
  • U.S. housing starts up from 1.16M to 1.17M vs. 1.27M forecast
  • Philly Fed index down from 25.7 to 11.9 vs. 21.9 consensus
  • U.K. CB leading index down 0.2% from previous flat reading
  • New Zealand PPI input prices up 1.0% vs. 0.2% expected
  • New Zealand PPI output prices up 0.9% vs. 0.1% expected

Major Events/Reports:

U.S.-China trade talks to resume

After previously hitting each other with tariffs, U.S. and China look ready to settle things like adults and resume trade talks by next week. These are set to take place on August 22-23, just right before the latest set of trade measures from both countries are scheduled to take effect.

One thing to keep in mind, however, is that these are still lower-level talks and that the discussions will center on “structural issues” and “concrete proposals.” In other words, no actual decisions are expected from these meetings but could be enough to keep markets hopeful that the situation won’t boil over.

During this meeting, representatives from the U.S. Treasury are also expected to persuade the Chinese delegation to work towards adjusting the value of the yuan.

White House economic adviser Kudlow confirmed that the U.S. and China are willing to hash out their differences but added that the latter’s economy “looks terrible.” He also noted that dollar strength is a sign of confidence in the U.S.

Lighthizer talks of NAFTA ‘breakthrough’

U.S. Trade Representative Robert Lighthizer expressed confidence that a NAFTA “breakthrough” could be achieved in the “next several days.”

His counterpart from Mexico, Economy Minister Ildefonso Guajardo, reiterated that there’s plenty of work to be done and that flexibility is needed. He added:

“We have everything on the table, there are no preconditions and we’ll see at the end how the whole thing falls into place.”

Talks are scheduled to resume before the week comes to a close, although there is still a lot of debate on auto tariffs issues.

Risk-taking extends its stay

The market mood was a positive one leading up to the New York session and it stayed that way throughout the day, lifted by a few more positive updates. U.S. equity indices closed in the green thanks to upbeat earnings data as well.

  • Dow 30 index is up 396.32 points to 25,558.73 (+1.58%)
  • Nasdaq is up 32.41 points to 7,806.52 (+0.42%)
  • S&P 500 index is up 22.32 points to 2,840.69 (+0.79%)

U.S. bond yields were also in the green:

  • 5-year yield is up to 2.745% (+0.12%)
  • 10-year yield is up to 2.870% (+0.05%)
  • 30-year yield is up to 3.027% (+0.16%)

Major Market Mover(s):

USD

The Greenback returned to positive territory a few hours into the U.S. session as bulls were drawn by upcoming U.S.-China trade talks.

USD/JPY advanced from 110.55 to a high of 111.13, EUR/USD retreated from 1.1410 to 1.1347, GBP/USD is down to 1.2693, USD/CHF is up to .9977, and AUD/USD slipped back to a low of .7251.

GBP

Profit-taking was the name of the game for pound bears, as sellers booked gains from earlier in the day.

GBP/JPY pulled up from a low of 140.51 to a high of 141.32, EUR/GBP retreated back to .8937, GBP/CAD popped up to 1.6750, and GBP/AUD is up to 1.7504.

Watch Out For:

  • 11:30 pm GMT: RBA Governor Lowe’s testimony before the House of Representatives’ Standing Committee on Economics
  • 7:30 am GMT: RBA Assistant Gov Ellis’ to speak in at the Australian National University