• The Japanese yen and Swiss franc pulled back from recent highs on Tuesday as investors judged that the chances of an all-out conflict between the United States and Iran had fallen. 
• The safe-haven yen fell from a three-month high versus the dollar, although sentiment remains fragile due to continued worries about a further deterioration in relations between the U.S. and Iran.
• The U.S. currency, the world’s most liquid, is often bought in times of market flux, but its performance has been mixed in recent sessions - slightly better-than-expected euro zone business survey data on Monday supported the euro.
• The euro was little moved by data showing inflation in the euro zone had accelerated in December and retail sales were stronger than expected.
• Recent survey data has pointed to improving investor and business confidence in the euro zone.

 (Source: Reuters)

• President Donald Trump signed a bill into law that expresses S. support for Hong Kong protesters, a move that will strain relations with China and further complicate the president’s effort to wind down his trade war with Beijing. 
• The legislation requires annual reviews of Hong Kong’s special trade status under American law, and sanctions against any officials deemed responsible for human rights abuses or undermining the city’s autonomy. 
• China’s foreign ministry had urged Trump to prevent the legislation from becoming law, warning the Americans it “will take strong countermeasures” against it. 
• The new U.S. law comes just as Washington and Beijing have shown signs of working toward what the White House calls a “phase-one” deal to ease the trade war. 

(Source: Bloomberg)

• Low approval ratings and Costa Rica’s poor economic outlook will constrain President Carlos Alvarado’s fiscal reform efforts.
• Furthermore, the polarising debate over same-sex marriage and other social issues will also contribute to political gridlock over the coming quarters.
• Fitch Solutions maintains it's Short Term Political Risk Index (STPRI) score of 64.9 out of 100, underlining a moderate risk of increased political protests limiting the Alvarado government's capacity to implement reforms.

(Source: Fitch)