Commodity-tied FX fades as China-US trade.....>

FOREX: Commodity-tied FX fades as China-US trade talks kicked into long grass

-After performing particularly strongly last week, AUD and NZD sit at the bottom

of the FX pile as WSJ reported that China had cancelled planned trade talks with

the US in the face of escalation threats on existing tariffs. Market holidays in

China, Japan and South Korea meant dip buyers were few and far between, leaving

the 50-dma in AUD/USD at $0.7302 as the next key resistance.

-GBP recovered modestly despite reports suggesting government had toyed with the

idea of a snap election as markets anticipate significant GBP/USD flows in the

coming months on the back of Comcast's victory in the auction for $39bln worth

of Sky assets on Saturday.

-EUR saw some support on the back of strong German IFO data. This, coined with

slight USD weakness, puts EUR/USD on track to re-test Friday's highs and break

above the $1.18 mark.

-Focus shifts to US Chicago Fed and Dallas Fed activity indices as well as an

appearance from ECB's Draghi in Brussels at 1400BST.