Risk sentiment recovered somewhat yesterday, following remarks by several US officials that calmed anxiety over the prospect of a trade war. Overnight, China’s President Xi Jinping boosted risk appetite further. In Canada, the upbeat BoC Business Outlook Survey fueled further the Loonie rally.
Trade-war Fears Ease; Markets Turn Back to “Risk-on”
The dollar traded lower against all but one of the other G10 currencies on Monday. The main gainers were CAD, NOK, AUD and NZD, while the sole loser was JPY. The pattern suggests a shift back to risk on, which is also supported by the fact that global equity markets ended the day slightly in the green. Gold was also up on Monday.
On Sunday, US President Donald Trump tweeted that “China will take down its Trade Barriers because it is the right thing to do so”, and that “Taxes will become Reciprocal & a deal will be made on Intellectual Property”. His comments come after a week of increasing tensions over trade between the US and China, and combined with remarks from several members of his administration, they provided a boost to risk appetite.
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