· The dollar started the new year where it left the old one, on the back foot as investors wagered U.S. economic outperformance might be drawing to a close as optimism on trade brightens the outlook for growth globally.
Signs of progress in the Sino-U.S. trade dispute undermined the dollar for much of December, leaving its index .DXY down 1.9% on the month. It was up just a fraction on Thursday at 96.546 having touched a six-month trough ahead of the holidays.
The euro held at $1.1215 EUR=, after gaining 1.8% in December to reach its highest since early August. It now looks set to challenge the August peak at $1.1249.
The dollar eased further on the Chinese yuan after shedding 1% last month to stand at 6.9630 CNH=. It was also finely poised on the yen at 108.68 JPY=, just a whisker from the December lows and major support around 108.40.
“A more encouraging global growth outlook and flush dollar liquidity conditions are undermining the USD,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia.
“Specifically, global fiscal/monetary policy settings will remain accommodative in 2020 and China’s growth slowdown is stabilizing.”
· USD/JPY Technical Analysis: 200-day SMA questions break of short-term support line
USD/JPY remains under pressure while trading around 108.70 during early Thursday. The pair recently slipped beneath an upward sloping trend line since early-November but failed to conquer 200-day SMA. Additionally, 14-bar RSI is also in the normal condition and indicates the continuation of sideways momentum.
An upside clearance of 108.80 support-turned-resistance can trigger the fresh recovery of the pair toward December 19 low of 109.20 whereas sustained trading below 200-day SMA, at 108.67 now, can take aim at December month low near 108.43.
It should, however, be noted that the pair’s trading past-108.43 can test lows marked on October 11 and November 01, around 107.80.
On the contrary, 109.70/80 region including multiple highs marked in December, followed by 110.00, restricts the pair’s rise past-109.20.
· China has temporarily blocked planned cross-border listings between the Shanghai and London stock exchanges because of political tensions with Britain, five sources told Reuters.
Suspending the Shanghai-London Stock Connect scheme casts a shadow over the future of a project meant to build ties between Britain and China, help Chinese firms expand their investor base and give mainland investors access to UK-listed companies.
The sources, who include public officials and people working on potential Shanghai-London deals, all said that politics was behind the suspension.
Two of them highlighted Britain’s stance over the Hong Kong protests and one pointed to remarks over the detention of a now former staff member at its consulate in Hong Kong.
· About 400 people were arrested in New Year’s Day protests in Hong Kong after what started as a peaceful pro-democracy march of tens of thousands spiraled into chaotic scenes with police firing tear gas to disperse the crowds.
The arrests take the total to about 7,000 since protests in the city escalated in June over a now-withdrawn bill that would have allowed extradition to mainland China, and will highlight the apparent absence of any progress toward ending the unrest.
· Both benchmarks ended higher in 2019, posting their biggest annual gains since 2016, buoyed at the end of the year by a thaw in the prolonged trade dispute between the United States and China - the world’s two largest economies - and a deeper output cut pledged by the Organization of Petroleum Exporting Countries (OPEC) and its allies.
Global benchmark Brent crude futures LCOc1, rose 35 cents, or 0.5%, to 66.35 a barrel by 0738 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 was up 25 cents, or 0.4%, at $61.31 per barrel.
· Vastly slower U.S. oil growth this year and the prospect of a plateau for the world’s top oil producer have signaled a new and unfamiliar era of self-restraint for the go-go shale industry.
Spending cuts and production declines common to shale wells mean U.S. output growth is expected to brake from 2019’s pace that pushed domestic production past 13 million barrels per day (bpd). Some analyst forecasts for next year call for growth to slow, potentially to a rate of just 100,000 new bpd.
Reference: Reuters, CNBC, FX Street
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