The Aussie made gains on Friday, closing at 0.7130(+23 pips) against the greenback. The gains were aided by rise in commodity prices and gains in global stocks. Moreover, trade optimism and a denial from China that it was deliberately targeting Australian coal imports were also behind the gains for the commodity natured pair. “US President Trump mentioned on Friday there was ‘a very good chance’ the US would strike a deal with China to end their trade dispute and that he was inclined to extend his March 1 tariff deadline and meet soon with Chinese president Xi Jinping,” said Ray Attrill, Head of FX Strategy at the National Australia bank.“Chinese Vice premier Lui He in Washington for the talks and attending Trump’s press conference agreed that there has been ‘great progress’ and that from China’s perspective it is ‘very likely that it will happen and we hope that ultimately we’ll have a deal’.” Trump expressed to reporters that he is likely to meet with Xi in March in Florida to decide on the most important terms of a trade deal. The positive remarks helped to drive commodity prices and stock prices higher, the latter helped by a reduction in expected US stock market volatility in the month ahead. The economic calendar for the Australians are quiet today, which means traders could expect the price action of the Aussie dollar to follow suit with the performances of the Chinese markets.
The Euro weakened by a margin to 1.1331(-8 pips) against the greenback on Friday. Optimism on trade talks between the US and China keeps the pair supported. China has offered to buy more US goods in order to balance the broad trade surplus it has with the US. US President Donald Trump will meet Chinese PM Liu He late in the day, and the announcement of the encounter sparked hopes. There have been no reports on progress on structural changes such as intellectual property. The eurozone is looking up after a slump early February, as the Euro-zone purchasing managers' indices for February, published on Thursday, came out mostly above expectations. However the German manufacturing sector still seems to struggle. German Q4 GDP was confirmed at 0%. Nevertheless, things may be as bad as previously seen. The German IFO Business Climate is projected to remain stable in the fresh report for February. European Central Bank President Mario Draghi will be speaking later in Bulgaria and may shed some more light on recent developments. Several of his colleagues spoke out on Thursday and expressed concerns about the slowdown.
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