USD Pauses, Key Levels Pre ISM

USD losing steam across the board as markets await US manufacturing ISM, but three items occurring at the same time ahead of the US trading session: 1. Rallying non-energy commodity currencies are led by the Kiwi after China's manufacturing PMI rose unexpectedly into expansion for the 1st time in seven months; 2. US crude oil bounces after posting the biggest daily drop in 2.5 mths; 3. US futures head back into the red partly on Trump's reinstating tariffs on Brazilian and Argentinean steel. NZDJPY was stopped out after China's data. A new FX trade has been issued, supported by 4 charts as agriculture commodities outperform metals and energy over the past three months.

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Indices initially ignored China's insistence on the US to roll back tariffs before signing off Round 1 of the trade talks, but risk if gradually coming off as USDJPY drops to 109.51 from 109.70s. VIX is up for the 3rd straight session, DAX continues to fail around the 13300 and FTSE100 at 7430s.

Meanwhille, the divergence between the Dow Jones' industrials and transportation indices (above chart) continues as Transports are unable to regain their record highs from 15 months ago.