Risk knocked on the head as US-China trade....>

FOREX: Risk knocked on the head as US-China trade deal looks troubled

-After a somewhat sanguine session, reports just after the European close

suggesting that some US officials are said to China "walking back trade offers"

knocked risk assets across the board. US equity markets sank, helping buoy the

JPY and prompting a rally back toward the day's highs for USD/CNH. While the

headlines initially read negative, follow-ups stating that some officials see

the China moves as "normal in talks" helped minimise the market fall-out.

-AUD carried its weakness from the Asia-Pac session throughout European and US

trade, forcing AUD/USD to respect the recent range of 0.70-0.71. AUD was the

poorest performer in G10 Tuesday.

-CAD saw a brief spell of strength, making light work of the 50- and 100-dmas

against the USD, with markets speculating that the forthcoming federal budget.

Nonetheless, any CAD strength was erased ahead of the 2000GMT release.

-The USD index broke below the 50-dma for the first time since late February and

a close below would open a move toward the Feb28 low of 95.824.

-The Fed rate decision takes focus Wednesday, with UK inflation data also due.