Early optimism that Trump had done a trade deal with the China's Xi at the weekend faded on Tuesday when investors continued to see nothing concrete to back up his claim. That fading confidence weighed on US equity prices and it was exacerbated by presidential tweets suggesting that he would be ready to reignite the trade war if China does not play his game. In one he referred to himself as "the Tariff Man", sending the Dow 200 points lower. The risk-off swerve was positive for the USD though. Even with no helpful - or even unhelpful - US economic data it strengthened by 0.6% against the EUR.
The second big round of purchasing managers' index readings, for the services sector, brought some respectable figures from Europe this morning. Except for the German number, which was on forecast and unchanged at 53.3, all were ahead of expectations and higher on the month. They ranged between Italy's 50.3 and France's 55.1, with pan-Euroland scoring a 53.4. Euro zone retail sales increased by 0.3% in October, leaving them just 1.7% higher on the year. In general the economic data from the euro zone continue to show little or no sign of a meaningful rebound and Italy seems to be on the verge of recession. Appetite for the EUR remained muted.
As risk-appetite faded, so did investors' appetite for he supposedly risky commodity-oriented currencies. The CAD spent the day drifting steadily lower, eventually losing 1.0% to the USD. The only Canadian statistic was labor productivity, which increased by an underwhelming 0.3% in the third quarter. On today's agenda the main event for the CAD will be the Bank of Canada's monetary policy statement. No change is expected to the BoC's 1.75% interest rate benchmark but investors will be keen to see where - if anywhere - the central bank sees the rate heading in the future.
It is rare that a government defeat in the House of Commons proves to be helpful to the GBP, even rarer that three lost votes fail to scupper sterling. But that is what happened overnight. The GBP is 0.7% lower against the USD but it has held its own against the EUR and CHF. That apparently odd outcome was because one of the lost votes handed more power to the Commons in future Brexit decisions. If, or as most commentators believe, when, the government loses next Tuesday's vote on the EU withdrawal bill, the House of Commons will have the power to decide what happens afterwards. It is highly unlikely that it will opt for a no-deal "hard" Brexit, and the diminishment of that fear saved the GBP's skin on Tuesday.
As the risk-off swing hurt the CAD it helped the safe-haven JPY, but not enough to prevent it falling by 0.2% against the USD. As on Monday, it moved almost in lockstep with the CNY; the two differed by just 0.1% on the day. The only statistical offering from Japan was the services PMI. It was almost unchanged on the month at 52.3.