· The dollar held firm at the start of a holiday-thinned week on Monday, as U.S. data pointed to solid economic growth while the British pound bounced slightly after having suffered its biggest weekly fall in three years.
“The U.S. economy appears to have stopped slowing. There is no indication it will be hitting a recession,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.
The euro stood at $1.10778 EUR=, little changed on the day but in retreat since it hit a four-month high of $1.12 on Dec. 13.
The dollar index =USD was at 97.659, flat on the day but maintaining its recovery trend since hitting a five-month low of 96.605 on Dec. 12.
Against the yen, the dollar changed hands at 109.41 yen JPY=, little changed on the day and not far from a six-month high of 109.73 touched earlier this month.
Sterling traded at $1.3011 GBP=D4, up slightly as it regained some stability after hitting a 2-1/2-week low of $1.2979 on Friday
· EUR/USD eyes second straight yearly loss
EUR/USD has erased a major chunk of the gains seen in the January 2017-February 2018 period and is on track to end 2019 on a negative note.
At press time, the pair is trading at 1.1082, representing a 3.17 percent drop on a year-to-date basis. The pair fell by 14.14% in 2018.
Recovery ahead?
The trade tensions have eased somewhat recently with the US and China reaching a phase-one trade deal.
More importantly, with the elections due in November 2020, President Trump has a strong incentive to soften his stance on China and agree to a trade truce if not a comprehensive deal.
As a result, many observers expect EUR/USD to gain ground in 2020. However, sustained gains will likely remain elusive if the Eurozone economic data fails to show material improvement.
· China will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year as Beijing looks to boost imports amid a slowing economy and a trade war with the United States.
Next year, China will implement temporary import tariffs, which are lower than the most-favored-nation tariffs, on more than 850 products, the finance ministry said on Monday. That compared with 706 products that were taxed at temporary rates in 2019.
The finance ministry said the tariff rate for frozen pork will be cut to 8% from the most-favored-nation duty of 12%, as China copes to plug a huge supply gap after a severe pig disease decimated its hog herd.
· Interest rates in the euro zone could remain historically low for years, but the European Central Bank’s (ECB) ultra-loose monetary policy risks becoming counterproductive, ECB governing council member Klaas Knot said in an interview published on Monday.
The Dutch central bank president said the current low rates lead to excessive risk taking among investors, while younger generations on the other hand might feel forced to keep increasing their savings.
· Hong Kong is gearing up for demonstrations over Christmas week with protesters planning events in districts across the city, including in prime shopping malls, the latest in more than six months of unrest.
This week’s protests follow a weekend of rallies, including one on Sunday, which ended in chaotic clashes between black-clad, masked demonstrators, who kicked and beat police officers, hurling bricks and glass at them. Police retaliated with bursts of pepper spray and one officer pulled out a gun toward a crowd but did not fire, according to witnesses and Cable Television.
Protests planned throughout the week include evening demonstrations in five malls on Christmas eve. A countdown rally is also planned near the city’s harbor front in the bustling Tsim Sha Tsui shopping district.
Protesters are also planning an event called “Suck the Christmas” on Christmas Day where they are expected to protest in different districts according to notices on social media.
· North Korean leader Kim Jong Un held a meeting of top military officials to discuss boosting the country’s military capability, the state news agency reported on Sunday amid heightened concerns the North may be about to return to confrontation with Washington.
· Oil prices fell on Monday, but were holding near recent three-month highs amid expectations that the United States and China will soon agree on a trade deal, with President Donald Trump saying an agreement would be signed “very shortly”.
Brent crude LCOc1 was down 16 cents, or 0.2%, at $65.98 a barrel by 0730 GMT. West Texas Intermediate CLc1 was down 22 cents, or 0.4%, at $60.22 a barrel.
Reference: Reuters, CNBC, FXStreet
Thai
Eng