· The U.S. dollar weakened across the board on Friday as optimism about the outlook for a U.S.-China trade deal lifted investors’ appetite for risk, sapping safe-haven demand for the greenback, in light end-year trading.
The dollar index, which measures the greenback against six other major currencies, was 0.6% lower at 96.951.
“The dollar has declined against a backdrop of coursing risk-on sentiment in global equity markets with investors anticipating the U.S.-China Phase 1 trade deal to be signed-off on soon, which will come amid a world of expansive monetary policy and benign inflation,” analysts at Action Economics said in a note.
Traders returned from their Christmas and Boxing Day break to digest comments from Beijing that it was in close contact with Washington about an initial trade agreement. Earlier, U.S. President Donald Trump had talked up a signing ceremony for the recently struck Phase 1 trade deal.
The offshore yuan was about flat on the day against the U.S. currency at 6.9917 yuan per dollar.
On Friday, the euro rose 0.76% to hit a 10-day high, its best day in nearly five months.
Sterling was 0.78% higher after European Commission President Ursula von der Leyen said the European Union may need to extend the deadline for talks about a new trade relationship with Britain.
· China’s Commerce Ministry has “proactively dealt with” trade frictions with the United States this year, it said on Sunday after an annual work conference.
The ministry has implemented the decisions of the central government and “resolutely safeguarded the interests of the country and the people”, it said in a statement on its website.
· Oil was little changed on Friday, steadying near three-month highs after new data showed U.S. crude inventories fell far more than expected, while upbeat economic data and optimism over a U.S.-China trade deal fueled a year-end stock market rally.
Brent crude futures gained 18 cents to trade at $68.10 per barrel, its highest level since mid-September. The West Texas Intermediate contract gained 4 cents to settle at $61.72 per barrel. WTI ended the week with a gain of more than 2%, for the fourth straight positive week.
U.S. crude stocks fell by 5.5 million barrels in the week to Dec. 20 to 441.4 million barrels, according to the Energy Information Administration, far exceeding analysts’ expectations of a 1.7 million-barrel drop.
“Inventories are bullish almost across the board,” said Josh Graves, senior market strategist at RJO Futures in Chicago.
A year-end stock market rally also helped lift oil prices as consumer sentiment continued to improve, he said.
“It’s a Santa Claus rally. People tend to buy more things that will indirectly drive the price of oil up,” Graves said.
· North Korean leader Kim Jong Un called for “positive and offensive measures” to ensure security at a ruling party meeting on Sunday ahead of a year-end deadline he has set for denuclearization talks with the United States, state media KCNA said on Monday.
Kim convened a meeting of top Workers’ Party officials on Saturday to pore over important policy matters amid rising tension over his deadline for Washington to soften its stance in stalled negotiations aimed at dismantling Pyongyang’s nuclear and missile programs.
· U.N. Security Council members are due to meet informally on Monday for a second round of negotiations on a Russian and Chinese proposal to lift a raft of sanctions on North Korea, a move that some diplomats say has little support.
China and Russia are convening negotiations a day before North Korean leader Kim Jong Un’s deadline for the United States to show flexibility in stalled talks aimed at getting Pyongyang to give up its nuclear weapons program. North Korea has warned the United States could receive an unwanted “Christmas gift” if it fails.
A top White House official said on Sunday that the United States would be very disappointed if North Korea tested a long-range or nuclear missile and would take appropriate action as a leading military and economic power.
· The United States is monitoring North Korea’s actions closely and finds the situation there concerning but there are open lines of communications between the two countries, White House national security adviser Robert O’Brien said on Sunday.
Washington wants to hold North Korean leader Kim Jong Un to his commitment to denuclearize the Korean Peninsula, O’Brien said on ABC’s “This Week.”
· The U.S. military carried out “precision defense strikes” in Iraq and Syria against a militia group following a string of attacks on Iraqi bases that host American servicemembers.
“In response to repeated Kata’ib Hizbollah (KH) attacks on Iraqi bases that host Operation Inherent Resolve coalition forces, U.S. forces have conducted precision defensive strikes against five KH facilities in Iraq and Syria that will degrade KH’s ability to conduct future attacks against OIR coalition forces,” chief Pentagon spokesman Jonathan Hoffman said in a statement Sunday.
“Iran and their KH proxy forces must cease their attacks on U.S. and coalition forces, and respect Iraq’s sovereignty, to prevent additional defensive actions by U.S. forces,” Hoffman added.
· The U.S. military carried out air strikes in Iraq and Syria against the Kataib Hezbollah militia group in response to the killing of a U.S. civilian contractor in a rocket attack on an Iraqi military base, U.S. officials said on Sunday.
Iraqi security and militia sources said at least 25 militia fighters were killed and at least 55 wounded following three U.S. air strikes in Iraq on Sunday.
Reference: CNBC, Reuters
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