FX Update: The dollar has been putting in a mixed performance
FX Update: The dollar has been putting in a mixed performance, eking out a three-session high versus the yen while posting losses against the yuan and other Asian currencies -- a five-year low in the case of the Thai baht -- and the euro. EUR-USD posted a two-week high at 1.1358. The high was a reflection of dollar weakness after Fed's Williams said he was comfortable with the pause in interest rates, and that the balance sheet roll-off would continue at least into next year at an unaltered pace, and not by the end of this year as markets have been speculating. As for the euro, concerns about U.S. tariffs on cars imported from the Eurozone along with signs of flagging Eurozone growth momentum and the associated rekindling in ECB dovishness should curtail the common currency's upside potential. USD-JPY edged out a three-session high of 110.94 and the China-proxy AUD-JPY cross posted a two-week high at 79.51. The gains in both partly reflect a continued yen underperformance theme, which was seen concurrently with rallying Asian stock markets. The yuan and other Asian currencies rose after a Bloomberg report yesterday suggested that the U.S. is set on securing a pledge from China that it will not devalue its currency as part of a trade deal. China's foreign ministry said today it won't use currency depreciation (and has in fact always denied that it has). This came amid some upbeat remarks from both Chinese officials and President Trump himself with regard to the ongoing trade discussions. The MSCI Asia-Pacific equity index rose over 1% in printing a four-and-a-half month high, while China's SSE equity index is now showing a year-to-date gain of 18%. Sterling has given back some of yesterday's gains. Cable fell over 50 pips to the lower 1.3000s.