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Hope for yuan in forex markets as Trump extends olive branch

Chinese Yuan and Dollars with chess piecesThe offshore Chinese yuan saw a slight rise this morning after US President Donald Trump appeared to hint that trade talks are not yet doomed to fail.

An escalating trade crisis over the weekend saw both China and the US levy tariffs on items from each other’s countries.

However, Donald Trump has now said that he believes the ongoing talks between the two nations will achieve a positive outcome – although there is still no firm expected date of completion for said talks, and the exact outcome is unknown.

The Chinese yuan, which dropped to its lowest point this year (of 6.92) over the course of Monday, managed to recover somewhat on Tuesday.

The Australian dollar, which often declines in times when China is suffering and rises when it does well due to the commodity trading relationship between the two economies, went up by 0.1% to $0.6952.

Elsewhere, the single European currency saw modest gains of just under a fifth of a percentage point in the EUR/USD pair – reaching $1.1238.

Today is a busy day on the forex trading calendar, and there’s a lot to look out for.

At lunchtime, there’ll be a series of import and export data releases from the US. The import price index for April will be out at 12.30pm GMT and is predicted to show a month on month change from 0.6% to 0.7%. The export price index for the same period is expected to show a change from 0.5% to 0.7% when it is released at the same time.

Also in the US, there’s a speech from a prominent central banker due at 4.45pm GMT. Esther L. George, President and CEO of the Federal Reserve Bank of Kansas City and a member of the Federal Open Market Committee, will speak.

Looking ahead to Wednesday, Chinese industrial production information for April is expected at 2am GMT. Year on year, this is forecast to show a change from 8.5% to 6.5%.

Preliminary German gross domestic product information for the first quarter of 2019 is due at 6am GMT. This is expected to show a quarter on quarter change from 0% to 0.4%.

Italian industrial sales information for March is due at 8am GMT and is expected to show a month on month change from 0.3% to 0.9%.

Preliminary Europe-wide gross domestic product information for the first quarter of 2019 is due at 9am GMT.

Over in the US, retail sales data for April is due at 12.30pm GMT. Month on month, it is expected to show a change from 1.6% to 0.2%.

The Bank of Canada’s core consumer price index for April will be out at the same time and is expected to show a change from 0.3% to 0%.

A number of speeches from central bankers are also scheduled in. Randal Keith Quarles, a member of the US Federal Reserve’s Board of Governors and its Vice Chair for Supervision, is expected to speak at 1.30pm GMT.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.


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