Forex news from the European morning session – 26 August 2019Headlines:Trump: If we don’t make a deal with China, US companies should leaveGlobal Times editor: China and US didn’t hold phone talks in recent daysTrump says “anything is possible” when asked about possible China tariffs delayGermany August Ifo business climate index 94.3 vs 95.1 expectedSNB total sight deposits w.e. 23 August CHF 591.7 bn vs CHF 589.3 bn priorWhat’s the story in the US-China trade rhetoric now?China foreign ministry says not aware of US-China weekend phone callsTrump: We have had two calls with China, they want to make a trade dealTrump: China called US negotiators last night, says they want to come back to the negotiating tableMarkets:AUD leads, CHF lags on the dayEuropean equities higher; E-minis up 0.5%US 10-year yields down 2 bps to 1.515%Gold up 0.3% to $1,532.00WTI up 0.7% to $54.57Bitcoin flat at $10,361Trump giveth, China taketh away. That has been the story of the session but ultimately, markets are siding towards being more optimistic after Trump’s early morning remarks.His mention of phone calls over the weekend gave risk assets a major boost with USD/JPY jumping from 105.20 to 105.95 before settling around 105.70 levels. That came as Treasury yields pared heavy declines and US futures erasing losses as well.The risk mood then got tempered as China offered no confirmation to the phone calls over the weekend. That saw USD/JPY slip back to 105.50 before regaining some poise to just under 106.00 as Trump said “anything is possible” with regards to delaying China tariffs.Following which, Global Times editor Hu Xijin said he hasn’t heard of such phone calls and that saw risk assets pare some gains before holding more steady on the day.USD/JPY dipped back to 105.70 before recovering to 105.80-90 levels currently. The fluctuating risk mood is leaving US yields much higher than when the session began.10-year yields are now down by just 2 bps to 1.515% after having been down by nearly 9 bps to 1.44% in the early morning in Europe. US futures are also firmer, recovering strongly from ~1% loss seen in Asia Pacific trading.The dollar also gained ground as a result of the more “positive” headlines with EUR/USD slipping from 1.1140 to 1.1110 levels now. Meanwhile, cable also quietly fell from 1.2265 to 1.2230-40 at the moment.As Trump also said that he isn’t likely to enact tariffs on German autos, it helped European equities climb further on the session after the turnaround. That is putting pressure on the franc as USD/CHF rises to 0.9800 from 0.9750 at the start of the session.Looking ahead, continue to pay attention to the risk mood and more importantly, any potential confirmation/denial remarks from both the US and Chinese camp on trade matters. Regardless, I still reckon markets are feeling too optimistic in all of this.I mean, it’s not like either side have moved their red lines in this whole ordeal. This is merely a temporary euphoria before the reality sets in once again. As mentioned earlier, we have been down this road one too many times already.