Investors appear to be shrugging off the deepening trade conflict between the United States and China. Data from Europe overnight showed French and Italian industrial output had weakened, which may have initially "revived this idea that trade wars, even before they’ve started, have already begun to hit investment and activity in trading partners," said Daniel Katzive, head of FX strategy for North America, BNP Paribas.
But greater comfort with risk prevailed over the course of the trading day. "The basic thesis that nothing permanently damaging has happened thus far has remained intact," said Katzive.
Investors may instead be focused on the positive outlook for second-quarter corporate earnings, which kick off this week. Credit Suisse projects that second-quarter revenue will grow by and earnings per share by 20.1 percent.
"Even if the trade concerns were still there, (investors) would be confronting a better earnings outlook in 2018, so that’s another consideration that’s keeping risk appetite strong," said Thierry Wizman, global interest rates and currencies strategist at Macquarie Group Limited.
Against the Japanese yen, a currency usually bought in times of geopolitical uncertainty, the greenback was up 0.5 percent to a session top of 111.35 yen
Emerging market currencies rose as risk appetite returned to the market. Major currencies across Latin America strengthened. It took 2 percent fewer Mexican pesos
The British pound
(Reporting by Kate Duguid and Tom Finn; Editing by Dan Grebler and David Gregorio)
By Kate Duguid