Forexlive Asia-pacific FX news wrap: Optimism creeps back in as Washington turmoil ebbs

• Senate Democrats back off on government shutdown threats
• Schumer confirms that Democrats will vote to keep government open
• Ontario premier: We had a very productive meeting, will have another next week
• Canada finance minister: We agreed to maintain dialogue
• Lutnick releases statement after meeting Canadian officials (spoiler, it doesn’t say much)
• Bessent: Hopefully we don’t get a recursive Biden-flation
• EU’s Kallas: It’s most likely that Russia will agree to ceasefire with conditions
• Jeff Gundlach sees a 60% chance of a US recession this year, sees gold hitting $4000
• Fox Business reporter sends mixed messages on hopes for Mexico-Canada tariff relief
• New Zealand February food price index -0.5% vs +1.9% prior
• New Zealand manufacturing PMI 53.9 vs 51.4 prior

Markets:

• WTI crude oil up $0.45 to $67.00
• US 10-year yields up 2 bps to 4.29%
• S&P 500 futures up 0.8%
• Hang Seng +2.4%
• Nikkei +0.8%
• NZD leads, JPY lags

It’s a nice risk-on day to wrap up the Asian trading week and there aren’t really any caveats in the price action as all the risk-positive moves are unfolding in the textbook way.

There were two catalysts, the first was a decision by Senate Democrats to vote for the Republican bill and avoid a government shutdown. The second was a meeting between US and Canadian officials where the Canadian side left feeling upbeat (and the US side stayed quiet). It wasn’t exactly a rousing success but ti came with other indications that some people in Republican circles have had enough of the trade war.

There are also those looking to buy dips in risk assets and some real strength in China today is adding to the enthusiasm. So far, the moves in FX are modest outside some decent yen selling. Headlines out of Tokyo so far today have been minimal.

The other spot everyone is watching is gold. Futures have already crested $3000 for the first time and cash is now trading just $8 away with some momentum in the past few minutes following a $58 rise on Thursday. It’s been a great year so far for the gold bugs as the US dollar sags and tariff worries mount.

The problem here is that you can’t have gold rising on tariff worries rising and stocks climbing on tariff worries receding. Eventually that will have to unwind but at the momentum, $3000 is such a magnet.

Have a great weekend, Eamonn will be back to start the new week.

This article was written by Adam Button at www.forexlive.com.