• The U.S. dollar index was little changed on Tuesday while emerging market currencies outperformed, as rising stock markets reflected an improved risk appetite.
The three main Wall Street indexes each rose more than 2 percent as upbeat earnings from blue-chips such as Johnson & Johnson (JNJ.N) and Goldman Sachs (GS.N) eased jitters over the impact of rising interest rates and tariffs on corporate profits.
“It seems as if we have a risk-on tone. Equity prices seem to be rising globally again and reversing a little bit of the panic that we saw last week,” said Mark McCormick, North American head of FX strategy at TD Securities in Toronto.
The greenback was supported last week as benchmark 10-year Treasury yields US10YT=RR surged to a seven-year high of 3.26 percent, while stocks tumbled.
Yields are now consolidating at around 3.16 percent, reducing demand for the dollar.
The euro rose 0.04 percent to $1.1582, while the Japanese yen weakened 0.34 percent versus the greenback at 112.15 per dollar. The dollar index fell 0.05percent.
The dollar itself was up on the yen at 112.31 but flat on the euro at $1.1578. Against a basket of currencies, the dollar idled at 95.080 having touched a two-week trough overnight.
• The U.S. Trade Representative’s office told Congress on Tuesday it intends to open trade talks with the European Union, the United Kingdom and Japan.
Under fast-track rules, the United States cannot start talks with the EU, Japan and the United Kingdom until 90 days after notifying Congress.
• The U.S. economy sits atop of the World Economic Forum’s annual global competitiveness survey for the first time since the 2007-2009 financial crisis, benefiting from a new ranking methodology this year, the Swiss body said on Tuesday.
• U.S. Federal Reserve Chairman Jerome Powell has said a disorderly Brexit could harm the United States economy, French news agency AFP said in a tweet on Tuesday.
• U.S. President Donald Trump heaped more criticism on the Federal Reserve in an interview with Fox Business Network on Tuesday, extending his discontent beyond its chairman, Jerome Powell, whom he has frequently critiqued in public.
“My biggest threat is the Fed,” he said, according to excerpts released before the interview with “Trish Regan Primetime” airs. “I put a couple of other people there I’m not so happy with too but for the most part I’m very happy with people.”
• U.S. President Donald Trump said on Tuesday it “would be bad” if Saudi King Salman or Crown Prince Mohammed bin Salman knew about missing Saudi journalist Jamal Khashoggi.
Pressure is growing on Saudi Arabia to explain the fate of journalist Jamal Khashoggi, as US Secretary of State Mike Pompeo met King Salman in Riyadh.
A Turkish official told CNN on Tuesday that Khashoggi's body was cut into pieces after he was killed two weeks ago at the Saudi consulate in Istanbul. The claim, which was first made to the New York Times earlier in the investigation into Khashoggi's fate, comes after Turkish officials searched the consulate for nine hours on Monday night. The Turkish official would not comment on the disposal method for the body.
• North and South Korea held their first three-way talks with the United Nations Command (UNC) on Tuesday to discuss ways to demilitarize the border as the neighbors push for peace, South Korea’s defense ministry said.
• China trimmed its holdings of U.S. Treasurys in August by about $6 billion, to the lowest level since June 2017.
China's holdings of Treasury bills, notes and bonds fell to $1.165 trillion, from $1.171 trillion in July, according to U.S. Treasury data. It is the third month of decline, and well below the recent high of $1.2 trillion a year earlier.
Bond traders have been watching to see if China is intentionally reducing its holdings of U.S. Treasurys because of friction over the trade spat with the U.S., but market pros do not believe the reduction is meaningful. It also came at a time of currency volatility this past summer.
• Oil prices edged up in cautious trade on Tuesday as expectations of higher U.S. shale output and inventories vied with worries that crude supply from the Middle East could be disrupted by looming U.S. sanctions on Iran and growing tensions with top exporter Saudi Arabia.
Brent crude rose 63 cents, or 0.8 percent, to settle at $81.41 a barrel, while West Texas Intermediate (WTI) crude ended the session up 14 cents at $71.92a barrel.
Reference: Reuters, BBC, CNN, CNBC
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