· Overnight, the dollar rose to as high as 109.68 yen JPY= against the safe-haven Japanese currency, a one-week high and not far from 109.73 yen, its late May peak brushed earlier this month. In late Asian trade, the pair was last quoted at 109.50 yen, down 0.1% on the day.
“Although the overnight gains in the dollar were partly erased by dipping Treasury yields after the seven-year note auction, U.S.-China trade optimism has put a solid floor under the dollar,” said Toshinobu Chiba, chief portfolio manager for fixed income at Nissay Asset Management.
“In any case, I don’t expect any large moves either way in markets today as trading remains subdued due to the holiday week.”
· U.S. Treasury yields slipped on Thursday after the Treasury Department sold $32 billion in seven-year notes to strong demand. The 10-year US10YR=RR last stood at 1.894%, its lowest level in 1-1/2 weeks.
· The euro last stood at $1.1118 EUR= versus the greenback, 0.2% higher on the day.
The yuan weakened 0.1% in offshore trade to 6.9967 yuan per dollar CNH=.
Elsewhere, sterling traded at $1.2993 GBP=, a shade higher than the levels before the Christmas holiday but still way below its Dec. 13 peak of $1.3514.
· China’s biggest risk lies in keeping the local market closed to foreigners, a government research fellow said Thursday.
Trade tensions with the U.S. have put pressure on China to respond to long-standing complaints that key local industries are off-limits to foreign companies, and that domestic players have an unfair advantage in China’s state-controlled economy.
Beijing has acted swiftly this year. Authorities rushed to pass a new foreign investment law in March.
About six months later, regulators announced that foreign companies can take full ownership in key parts of the financial industry at least a year earlier than expected. The new measures roll out Jan. 1, which is also the effective date of the foreign investment law.
“Regarding the risk of opening up to the outside, I think not opening up is the greatest risk,” Zhao Jinping, a fellow at the Development Research Center under the State Council, told a group of foreign reporters Thursday. That’s according to a CNBC translation of his Mandarin-language remarks.
· Japan’s industrial output slipped for the second straight month in November, raising the likelihood the economy will fall into contraction in the fourth quarter due to slowing demand abroad and at home.
The economy has cooled in recent months due to a prolonged hit to exports from soft global demand and a slide in consumer spending following a nationwide tax hike.
Official data showed factory output fell 0.9% in November from the previous month, a slightly slower decline than the 1.4% fall in a Reuters forecast.
· “Manufacturers’ output outlook (for Dec and Jan) suggests they kept expectations for recovery in factory output,” said Hiroaki Mutou, chief economist at Tokai Tokyo Research Institute.
“There is still uncertainty for the economic outlook as the effects from the U.S.-China trade friction will likely remain but there are positive signals for a moderate pickup in factory output.”
Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to gain 2.8% in December and rise 2.5% in January, the data showed.
· A Bank of Japan policymaker played down the chance of meeting a proposal by the International Monetary Fund to tweak the central bank’s 2% inflation target into a looser goal set in a range, a summary of opinions at the BOJ’s December rate review showed.
· Oil prices rose on Friday, hitting three-month highs after data showed record online spending by U.S. consumers, stoking faith in the world’s no. 1 economy even before the hoped-for end to the trade war between Washington and Beijing.
Brent crude futures were up 6 cents, or 0.1%, at $67.98 a barrel at 0612 GMT, after rising to as high as $68.10, the highest since September. The West Texas Intermediate CLc1 contract was up 11 cents, or 0.2%, at $61.79 a barrel.
A survey on Thursday showed that online holiday purchases by U.S. consumers reached a record, beating analysts’ expectations and sending U.S. stocks to fresh.
U.S. consumers are “showing few signs of tightening their purse strings, which is positive for oil also,” said Stephen Innes chief Asia market strategist at AxiTrader.
Oil prices have also been buoyed by robust hopes that the New Year will usher in an end to the long-running U.S.-China trade tariff war, a dispute that has overshadowed global economic growth prospects and left questionmarks over future demand for crude.
The lingering ripple effect of the trade row showed up again in data from Japan, the world’s third-biggest economy, on Friday showing that industrial output shrank for a second month in November.
· WTI Technical Analysis
WTI follows a short-term bullish chart formation while rising to $61.88 during early Friday. In doing so, the black gold ignores the overbought conditions of the 14-bar Relative Strength Index (RSI).
During the energy benchmark’s sustained rise, the resistance line of the fortnight-old ascending trend channel, at $62.60, can entertain the Bulls ahead of the September month high near $63.13.
Should traders book profits from the multi-month top, the channel’s support near $60.75 becomes the key as a downside break of the same will highlight a 100-bar Simple Moving Average (SMA) level of $59.60.
If at all bears’ fail to bounce off 100-bar SMA, November month top surrounding $58.70 will return to the chart.
Reference: Reuters, FXStreet, CNBC
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