Asia Pacific Market Open Talking Points
- The US Dollar[1] depreciated on Friday with an improvement in sentiment
- US-China seem to be inching closer towards a trade deal, S&P 500[2] rose
- APAC equities may follow Wall Street higher, Nikkei 225[3] eyes resistance
Check out our 1Q forecasts for currencies like the US Dollar in the DailyFX Trading Guides page[4]
The US Dollar (DXY Index) generally weakened across the board on Friday amidst an improvement in sentiment. Although, losses were trimmed towards the end of the session. Both the S&P 500 and Euro[5] Stoxx 50 closed about 0.6% and 0.3% to the upside. The cause of market optimism seemed to stem from welcoming news on the US-China trade war front.
After meeting with China’s Vice Premier Liu He, US President Donald Trump announced that there is a “good chance” that a trade deal will be made. It looks as though the deadline before the US imposes additional tariffs on China (March 1) has been extended[6]. What is interesting is that shortly after the announcement, the US Dollar pared losses looking at the chart below.
Initial Market Reaction to US-China Trade Update
Chart created in TradingView
At the time of this writing, S&P 500 futures pared their losses (seen above) and closed higher. But, there was also a rebound in front-end US government bond yields as USD[7] trimmed its losses. It seems that an improving external environment bodes well for hawkish Fed monetary policy expectations, opening the door to gains in the Greenback[8]. By the end
