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A reversal of fortunes from earlier trading sessions took place as New York session traders seem pleased about developments in key issues like trade and Brexit.

The lower-yielding yen returned most of its previous gains against its rivals, particularly the Loonie which got an extra kick higher from Trump’s NAFTA remarks.

  • U.S. NFIB Small Business Index up from 107.9 to 108.8
  • Canadian housing starts dipped from 206K to 201K vs. 213K forecast
  • U.S. final wholesale inventories at 0.6% vs. 0.7% forecast
  • U.S. JOLTS job openings up from 6.82M to 6.94M vs. 6.68M consensus
  • Trump: Trade talks with Canada going well
  • Trump: Ottawa very much wanted to make a deal
  • WSJ report: Official assures U.S. firms their mainland operations won’t be targeted

Major Events/Reports:

Risk-taking or just profit-taking?

Risk-off flows eased for the most part of the session as traders appeared to turn their focus to positive developments instead. Wall Street was in a cheery mood as tech and energy sector gains allowed equity indices to close in the green.

  • Dow 30 index is up 113.99 points to 25,971.06 (+0.44%)
  • S&P 500 index is up 10.76 points to 2,887.89 (+0.37%)
  • Nasdaq is up 48.31 points to 7,972.47 (+0.61%)

U.S. bond yields were also notably higher, likely supported by stronger than expected medium-tier data highlighting the possibility of another Fed hike later this month.

  • U.S. 2-year yield is up to 2.7479%
  • U.S. 5-year yield is up to 2.8688%
  • U.S. 10-year yield is up to 2.9773%

Commodities were also in positive territory, with crude oil getting a boost from a larger than expected draw in API stockpiles.

Upbeat trade-related updates

Market watchers had been on edge for the most part of the day as it has been reported that China asked the WTO for permission to impose sanctions on the U.S.

However, some of these concerns appear to have been eased when a WSJ report revealed that the Chinese President’s chief of economic policy, Liu He, has assured American business owners that their operations in the mainland won’t be targeted in any retaliatory measures.

These remarks were made in a meeting with U.S. business executives last month where Liu He emphasized that they won’t allow retribution to foreign companies, according to people briefed on the event.

Although U.S. President Trump repeated that they are taking a tough stance on China, he also mentioned that trade talks with Canada are going well and that Ottawa very much wanted to make a deal.

Sources familiar with NAFTA negotiations later on shared that Canada is willing to give the U.S. limited access to its dairy market in order to move forward with talks.

Keep in mind that this one of the key issues on the table, so this potential concession might be a good compromise and could improve the odds of sealing the deal by October 1.

Major Market Mover(s):

JPY

After a strong run in the previous session, the yen gave up most of its safe-haven gains to fall behind the rest of its peers.

USD/JPY recovered from 111.39 to a high of 111.64; EUR/JPY is up from a low of 128.78 to a high of 129.55; GBP/JPY climbed back to 145.48; and AUD/JPY is back up to the 79.50 area.

CAD

The Loonie left its rivals eating dust towards the end of the session, thanks to positive NAFTA remarks from the POTUS himself.

USD/CAD retreated from a session high of 1.3173 to a low of 1.3042; CAD/JPY popped up from 84.65 to a high of 85.57; EUR/CAD slipped from 1.5237 to 1.5148; and GBP/CAD is back down to the 1.7000 handle.

Watch Out For:

  • 11:50 pm GMT: Japanese BSI manufacturing index (rebound from -3.2 to +8.0 eyed)
  • 12:30 am GMT: Australia’s Westpac consumer sentiment (-2.3% previous)
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