· The dollar was largely steady against other major currencies on Friday but set for its best week in a month thanks to a stronger tone to economic data.
Sterling, which has taken a beating from renewed concern over a hard Brexit, was set for its worst week in over two years against the greenback. Against the euro, the pound was poised for its largest weekly loss since July 2017.
Trade was generally subdued ahead of the Christmas and New Year holiday period.
A final reading of U.S. economic growth in the third quarter, due out later, was expected to get some attention.
Data this week has fueled expectations that the U.S. Federal Reserve is unlikely to cut interest rates again in the near future, bolstering the dollar.
The dollar index was a touch firmer at 97.41. It has recovered almost 0.9% from five-month lows hit last week and is up 0.3% this week, poised for its biggest weekly rise in a month.
The euro was flat at $1.11210, while the dollar was a touch firmer at 109.39 yen.
Britain’s pound steadied, nursing heavy losses. It was 0.15% firmer at $1.3023 and at 85.40 pence per euro.
· Trump says trade deal with China to be signed 'very shortly'
President Donald Trump on Saturday said the United States and China would “very shortly” sign their so-called Phase One trade pact.
The Phase One deal was announced earlier this month as part of a bid to end the months-long tit-for-tat trade war between the world’s two largest economies, which has roiled markets and hit global growth.
· US-China phase one deal softens trade risks, but tech dispute remains
Markets may have “priced in” the de-escalation of the U.S.-China trade war as the phase one deal looks set to soften risks related to global growth, but one unpredictable factor remains: technological restrictions the U.S. may impose on China going forward.
That’s according to S&P Global Ratings’ APAC chief economist Shaun Roache, who suggested that whichever wins in technology will also dominate the world.
“I think we may see some moves by the U.S. towards non-tariff measures next year, particularly in the technology sector and that’s going to create more uncertainty, more concern again as we go through 2020,” he said.
Beijing and Washington agreed to a temporary truce that is supposedly a game changer for the global economy judging by the stock market’s rise to a record, but Roache said trade is only one part of the battle.
“It looks like on the tariff side, the phase one deal has taken some risk of escalation off the table for 2020. Markets have priced that in clearly,” said Roache.
“It’s this other aspect of the relationship, that’s more to do with technology, non-tariff measures where it’s much more complicated. The risks of escalation is much higher and actually it’s where we think the long term impact is much greater,” he added.
· U.S. President Donald Trump signed a $1.4 trillion budget package for the fiscal year 2020 into law on Friday to avert a government shutdown, White House spokesman Judd Deere told journalists traveling with the president on Air Force One.
Trump signed the package on the flight from Washington to Florida. He had been expected to sign the bill into law after the government’s spending plans were hammered out by Congress this week, and his signature was needed before midnight to avert a shutdown.
· Japan’s ‘Abenomics’ sputters as trade damage spreads, tax revenues undershoot
Japan’s “Abenomics” stimulus program appears to be reaching a turning point as growth is sputtering and the hit to exports from slowing global demand is spreading to various sectors of the economy. The slowdown makes it more likely that the government and central bank will need to devise novel ways to stimulate growth in the world’s third-largest economy in 2020, although they are hampered by a near-empty policy arsenal.
Analysts don’t expect a fourth-quarter contraction to be a major catastrophe as long as a fragile Sino-U.S. trade truce lasts.
· Oil fell on Friday, but still managed to post its third straight week of gains amid the easing of U.S.-Chinese trade tensions, which has boosted business confidence and the outlook for global economic growth.
Brent fell 48 cents, or 0.7%, to $66.06 a barrel. U.S. West Texas Intermediate crude fell 74 cents, or 1.2%, to settle at $60.44. Despite Friday’s fall, WTI ended the week with a 0.5% gain.
Progress in the trade dispute between the world’s two biggest oil consumers has raised expectations of higher energy demand next year.
· Hong Kong riot police pepper sprayed protesters to disperse crowds in the heart of the city’s financial district on Sunday after a largely peaceful rally in support of China’s ethnic Uighurs turned chaotic.
Reference: CNBC, Reuters
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