European session review: JPY and USD fall as upbeat comments on U.S.-China trade talks solidify positive sentiment

Safe-haven USD and JPY fell against their major rivals in the European session on Tuesday as upbeat comments by the senior Chinese and U.S. trade officials on trade talks solidified positive sentiment, which was boosted on Monday by hopes for a near-term coronavirus vaccine breakthrough. JPY traded lower against USD.

The U.S. Treasury Secretary Steve Mnuchin and the U.S. Trade Representative (USTR) Robert Lighthizer held a phone call with China's Vice Premier, Liu He, late Monday to discuss implementation of the Phase One trade agreement signed by the world’s largest two economies earlier this year.  After the call, the USTR’s office stated that “both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement”. Meanwhile, China's Commerce Ministry described the conversation as "constructive" and confirmed that "the sides agreed to create the conditions and atmosphere for further facilitating the implementation of the Phase One trade deal."

Sentiment was initially boosted by news that the U.S. Food and Drug Administration (FDA) approved emergency use authorization for convalescent plasma in hospitalized COVID-19 patients. In addition, the UK’s drugmaker AstraZeneca announced that it had begun testing an antibody-based cocktail for the prevention and treatment of COVID-19. The announcement came following the Financial Times’ report that the Trump administration is considering "fast-tracking" the Covid-19 vaccine candidate being developed by AstraZeneca and Oxford University. These announcements raised hopes for a potential COVID-19 treatment breakthrough.