he dollar was weaker against the euro, while the safe-haven Japanese yen briefly rallied back towards the 108.5 level on signs of a setback in negotiations between the two countries. According to a CNBC report released yesterday, China is apparently pessimistic about a deal being agreed on the ‘phase 1’ agreement before the next round of tariffs come into effect on 15th December.

Suggestions that a meeting between President Trump and Federal Reserve Chair Jerome Powell went off without a hitch has also got the market somewhat concerned, given Trump’s persistent calls for more accommodative monetary policy. The fact that Trump expressed satisfaction with the talks has got the market slightly concerned that Powell may have given reassurances to the President that interest rates will remain low for the foreseeable future. These concerns were, however, relatively fleeting, with the dollar clawing back much of its losses during Asian trading.

US housing data out this afternoon is unlikely to shift the greenback unless it materially deviates from consensus. Investors in the US will be paying much more attention to tomorrow evening’s FOMC minutes.

Johnson-Corbyn set for first TV debate

Sterling was one of the better performing currencies in the G10 yesterday, with the UK currency edging close to the 1.30 mark versus the dollar.

The markets’ optimistic view that Boris Johnson’s Conservative Party will triumph in next month’s election has been largely behind the move. The Tories continue to streak clear in the latest polls, with each of the last five surveys giving them at least a 10% advantage over the Labour Party. News that Johnson is talking about tax relief and higher spending has also helped buoy the pound. Investors have, in fact, almost completely overlooked recent economic data out of the UK, which has almost all surprised to the downside in the past couple of weeks or so.

The first television debate between the two main parties will take place at 8pm local time tonight, with the outcome of the perceived victor of the debate likely to have at least some sort of impact on the currency markets.

ECB member Vasle warns over further rate cuts

With all eyes on the trade war, volatility in the euro continues to be driven largely by events elsewhere,

Markets did have some comments from a couple of European Central Bank members to digest yesterday, which mostly erred on the dovish side. ECB member Boštjan Vasle stated that the large stimulus programme introduced in September was working, although there was still room to lower rates further should the situation worsen. He did, however, state that the Euro Area economy was developing as projected and that growth had stabilised, ensuring that his dovish remarks were mostly overlooked.

Investors may get a much clearer idea as to the ECB’s thinking on Thursday when the bank’s accounts from its November meeting are released.