The U.S. dollar extended its modest gains from yesterday overnight and stocks recovered as both China and President Trump indicated an apparent willingness to retreat from a potential trade war.
The greenback found some support yesterday morning after ADP private jobs data impressed, possibly foreshadowing a strong Non-Farm payrolls print tomorrow morning.
The greenback has also been a beneficiary of soft economic data released in the Eurozone and Great Britain. The U.S dollar is also rising against the Australian and New Zealand dollars as global commodity prices have ticked lower.
This morning’s economic docket was light with only weekly jobless claims and trade balance crossing the wires. Jobless claims remain near the best level in four decades.
The Euro dipped lower against the U.S. dollar overnight on the back of poor data. German factory orders rose only 0.3% in February, missing estimates of a 1.5% expansion. French services and composite PMI’s met expectations but the German reading fell and Italian figures disappointed. As a result, the final Eurozone service PMI was downwardly revised. Nevertheless, EUR/USD has remained in a tight 2% band since late January.
The safe-haven Japanese yen fell to its weakest level in 3-weeks against the U.S. dollar as global markets have found a rare sense of calm. New White House National Economic Council Director Larry Kudlow and others attempted to calm markets yesterday, highlighting that the tariffs have not been put in place yet and portrayed them as a bargaining tool. Chinese officials also took a softer tone. As a result, U.S. equities recovered and Asian and European stocks rallied overnight, reducing demand for the yen as a safe-haven.