A potential breakthrough in the long-time tensions on the Korean Peninsula gave global markets a lift on Tuesday.
Gold prices also responded positively. The yellow metal jumped $13 (+1.0%) to $1,332/oz in early trading.
Spot silver added 29¢ (+1.75%) to $16.70/oz. Platinum was up $4 (+0.4%) to $964/oz while palladium saw earlier gains wiped out, trading flat at $975/oz.
Republicans Push Back Against Trump on Trade
Markets also seemed optimistic that the supposed "trade wars" being sought by the Trump administration are not set in stone.
Wall Street was poised for its second straight day of gains as Republican lawmakers made a concerted effort to get the president to reconsider imposing steep tariffs on steel and aluminum, among other import items.
Although the Constitution gives Congress sole power to levy tariffs, subsequent legislation allows the president a considerable amount of leeway to make trade policy unilaterally.
The dollar sank by 0.6% on the DXY index to about 89.55 on Tuesday morning.
It was the worst loss for the USD in three weeks. Bonds also fell as the 10-year Treasury yield rose to 2.89%.
Naturally, the euro ($1.24) and pound sterling ($1.39) were both up against the dollar. The yen eased to ¥106.2 per dollar.
Stocks rallied beyond Wall St, as well. Asian markets were up sharply overnight: the Shanghai Composite was up 1.2%, the Nikkei 225 rose by 1.8%, and the Hang Seng index in Hong Kong surged 2.1%.
European shares traded about 0.6% higher across the continent. London's FTSE 100 gained 0.8%.
Oil prices were just slightly below unchanged despite the weaker dollar. WTI crude held at $62.50/bbl and Brent crude was steady around $65.50/bbl.
North Korea Signals Willingness to Talk
Besides optimism over avoiding a trade war, Tuesday's market rally was related to easing tensions with North Korea.
After agreeing to compete in the Winter Olympics (which were just held in Pyeongchang, South Korea) under one flag, discussions of rapprochement between the two Koreas suddenly seems possible.
Officials from the South and North are reportedly willing to meet next month. There are even suggestions that the Kim regime may be willing to denuclearize and normalize relations with the U.S.
This would undoubtedly be a huge step toward greater geopolitical stability.
In other news, several members of the Federal Reserve Board will be heard from today.
NY Fed President Bill Dudley is speaking in the Virgin Islands this morning. Two more Fed officials will be making public appearances after markets close.
One of the key changes that Congress is considering making to Dodd-Frank is rolling back the Volcker Rule, which places restrictions on "proprietary trading" by commercial banks.
Looking ahead, the European Central Bank (ECB) meets on Thursday while the Bank of Japan (BOJ) holds its next policy meeting on Friday.
Investors will also be watching for the release of February's nonfarm payrolls on Friday.
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