Some thoughts on what's driving the move:
Powell was hawkish yesterday and the market has priced out about 40 basis points in Fed rate cuts in the past two weeks.
There is some element of smoke-and-mirrors with the UK trade deal but it's not devoid of substance. The US has been touting deals and got one here and the market may be anticipating more to come.
I think it's a preposterous idea to think the US can get away with a 10% tariff floor while asking other countries to bring down trade barriers but maybe I'm wrong. The UK today lowered barriers for imports from the US and accepted -- at least for now -- a 10% tariff. And that's with the UK having a trade surplus with the USA. Maybe Trump really is a deal-making magician and he will roll more-meaningful US trade partners as well.
I think this is the big one. He said that talks with China would be 'substantive' and that tariffs would come down (though in part because "they can't go any higher"). It's not much but it's a change in tone and an indication that he expects progress this weekend. It's tough to read the tea leaves on this one but the market is sensing progress.
This article was written by Adam Button at www.forexlive.com. Read More Details
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