Risk appetite deteriorated during Tuesday after notably cautious remarks on trade from President Trump.

Risk appetite deteriorated during Tuesday after notably cautious remarks on trade from President Trump and a frosty response from China.

The dollar failed to make headway as Monday’s ISM data continued to curb support, although EUR/USD was held below 1.1100.

Sterling made net gains as an opinion poll suggested a likely Conservative majority, but GBP/USD failed to hold above 1.3000

The Swiss franc regained ground with the yen also making net gains as fragile risk appetite triggered fresh demand for defensive assets.

The Australian dollar was hampered by a slight GDP miss and surrendered gains. Precious metals drew support from weaker risk appetite and a fragile US dollar.

Early in European trading, there were reports that Euro-zone Finance Ministers were looking to push against negative ECB interest rates, although the overall market impact was limited. Opposition to negative interest rates could support the Euro over the medium term, although market attention remained focussed elsewhere with little Euro impact.

The UK PMI construction index improved to 45.3 for November from 44.2 previously and above consensus forecasts of 44.5. All three sectors continued to register declining activity with a lack of incoming orders again influenced by political uncertainty. Overall business sentiment remained weaker with political concerns still a key factor.

Sterling edged higher after the data and continued to advance ahead of the New York despite more fragile risk conditions. There was fresh support after an opinion poll indicated a slightly larger Conservative Party lead compared with the previous week with the survey suggesting a Conservative majority. GBP/USD pushed to 6-week highs above 1.3000 before hitting fresh selling interest and closed near this level while GBP/EUR held around 1.1720.

Global risk conditions were more fragile which hindered Sterling to some extent and GBP/USD was again unable to hold above the 1.3000 level with markets continuing to monitor domestic political developments and risk appetite.

Economic Calendar

08:45Markit/ADACI Svcs PMI(NOV)-52.2
08:50Markit Serv PMI(DEC)--
08:55EUR German PMI Services(NOV)51.251.6
08:55EUR German PMI Composite(NOV)48.648.6
09:00Euro-Zone PMI Composite(NOV)50.250.2
09:00Euro-Zone PMI Services(NOV)51.852.2
09:30GBP PMI Services(NOV)49.750
12:00USD MBA Mortgage Applications-1.50%
13:15USD ADP Employment Change(NOV)-125K
14:45USD Markit Services PMI(NOV)-50.6
14:45USD Markit PMI Composite(NOV)-51.2
15:00USD ISM Non-Manufacturing PMI(NOV)53.554.7
15:00CAD BoC Rate Decision-1.75%
15:00BOC Rate Statement--
15:30USD Crude Oil Inventories-1.572M

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.