Risk appetite returned to markets yesterday following reassuring news regarding the potential for a trade war between the US and China. President Trump tweeted positively about his relationship with Xi Jinping stating that China would take down its trade barriers and that there would be a “Great future for both countries”. Both Treasury Secretary Mnuchin and Economic Advisor Kudlow said that the two nations would resolve their differences without entering into a trade war.
Both the Euro and Sterling gained against the Greenback as traders processed weaker than expected US jobs data from Friday. Additionally, out from the UK, the Halifax released their House Price Index data, which came in at a 1.5% increase against an expected 0.1%, indicating a strengthening in the UK housing market.
Overnight, China’s Xi has unexpectedly announced plans for a more ‘open’ China, supporting lower tariffs on imports and protecting the intellectual property rights of foreign companies investing in China. This has further increased markets’ risk appetite with the Euro trading higher on the Dollar. This morning, the Bank of England’s Monetary Policy Committee member, Ian McCafferty has stated that the BoE should not dally when it comes to raising rates. This hawkish sentiment has provided a boost to the pound which is trading up on both the Dollar and Euro.