Risk appetite declined again in New York trading on Tuesday amid further concerns over US-China trade developments.

Risk appetite declined again in New York trading on Tuesday amid further concerns over US-China trade developments and the risk that talks will collapse given aggressive US rhetoric.

The yen continued to gain defensive support with USD/JPY dipping to 5-week lows below the key 110.00 level.

The dollar was mixed overall with a retreat from intra-day highs amid a lack of conviction over underlying trends.

Oil demonstrated some resilience amid the increase in Iran tensions and strong Chinese oil imports. Commodity currencies were also broadly resilient despite fragile risk conditions.

Sterling retreated on a lack of positive factors and Scandinavian currencies remained on the defensive. Precious metals were able to secure only limited gains.

Sterling drifted lower ahead of the New York open with the re-opening of UK markets following Monday’s holiday unable to provide support. Weaker global risk appetite and a retreat in oil prices were negative factors for the currency.

Political elements were important with Prime Minister facing a meeting with the Chair of the Backbench 1922 committee while government Brexit talks with the Labour Party resumed. The government announced that the UK would have to take part in the May 23rd European elections and there were reports that May would stay in office until September.

GBP/USD declined to lows below 1.3050 before a slight recovery while GBP/EUR made limited gains.
Latest BRC retail sales data suggested solid spending for April with a 3.7% like-for-kike annual increase, although the timing of Easter is likely to have been a factor. GBP/USD was little changed around 1.3070 with major uncertainty surrounding the global trade outlook tending to curb activity and deter longer-term investment decisions with GBP/EUR around 1.1650.

Economic Calendar

07:00German Industrial Production (M/M)(APR)-0.50%0.40%
08:30GBP Halifax HPI (M/M)(APR)0.10%-1.60%
09:15BOE MPC Member David Ramsden Speech--
12:30ECB President Mario Draghi's Speech--
12:30ECB Monetary Policy Meeting Accounts--
13:15CAD Housing Starts(APR)-192.5K
13:30FOMC Brainard Speaks--
15:30USD Crude Oil Inventories1.215M9.934M
18:00U.S. 10 Year Note Auction-2.47%

*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.