· The U.S. dollar rose broadly and investors shunned emerging market currencies on Tuesday, as concerns about a possible escalation in the trade conflict between the United States and China boosted safe-haven demand for the greenback.
The dollar index .DXY, which measures the greenback against a basket of six currencies, was up 0.34 percent at 95.464. It rose to a two-week high of 95.737, earlier in the session.
U.S. manufacturing activity accelerated to more than a 14-year high in August, boosted by a surge in new orders.
· The public comment period on a U.S. proposal for new tariffs on Chinese goods is set to end on Thursday, after which U.S. President Donald Trump can follow through on plans to impose tariffs on $200 billion more of Chinese imports, though it is unclear how quickly that will happen.
· U.S.-Canada trade talks ended on Friday with no deal to revamp the North American Free Trade Agreement after the mood soured, and President Donald Trump notified Congress of his intent to sign a bilateral trade pact with Mexico.
· Emerging markets stocks and currencies were under added pressure on concerns about inflation in Turkey and after data showed South Africa had slumped into recession in the second quarter.
MSCI’s emerging market stocks index was down 0.8 percent on track for its fifth straight day of declines.
· The U.S. dollar rose broadly and investors shunned emerging market currencies as concerns about the U.S.-China trade situation boosted safe-haven demand for the greenback.
In currencies, the U.S. dollar index, which measures the greenback against a basket of major currencies, rose 0.27 percent, with the euro down 0.32 percent to $1.1586.
The Canadian dollar weakened to a six-week low against its U.S. counterpart amid an uncertain outlook for Canada’s trading arrangement with the United States.
The Canadian dollar fell 0.64 percent versus the greenback at 1.32 per dollar.
The dollar gained 3.3 percent on the South African rand, and 1 percent against Turkey’s Lira.
· A JPMorgan emerging market currency index fell to its lowest since May 2017. The Mexican peso also slipped against the dollar.
· Major U.S. corporations bringing home cash from abroad, thanks to President Donald Trump’s tax overhaul, have boosted share buybacks but there is little evidence they are reinvesting much of that money to expand, according to the U.S. Federal Reserve.
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The biggest overhaul of the U.S. tax code in over 30 years, the Tax Cuts and Jobs Act passed by Republican lawmakers in December, slashed the corporate income tax rate and charged multinationals a one-time tax on profits held overseas. As a result, companies repatriated over $300 billion in the first quarter.
· Canadian Prime Minister Justin Trudeau indicated on Tuesday that Canada would not compromise on key demands at high-level talks this week with the United States to update the North American Free Trade Agreement.
Senior officials from both sides are due to meet in Washington on Wednesday in a bid to settle major differences amid pressure from Washington for a quick settlement.
· Apple farmers across the U.S. Northwest fear they will be the next victims of a U.S.-China trade war that left cherry growers in the same region with weak prices and having to scramble for alternative buyers because of prohibitive Chinese tariffs.
· Catalan leader Quim Torra relaunched a campaign to split his region from Spain on Tuesday, calling on the central government in Madrid to agree to a referendum on independence and rebuffing a vote that could only offer greater autonomy.
· Germany is doing all it can to ensure the European Union and Britain reach a divorce deal, Chancellor Angela Merkel said on Tuesday, warning that success was not guaranteed.
· With Syria apparently on the brink of a new spasm of violence, the White House warned on Tuesday that the United States and its allies would respond “swiftly and appropriately” if Syrian President Bashar al-Assad used chemical weapons again.
The White House also said in a statement that it was closely monitoring developments in Syria’s rebel-held Idlib region, where the Syrian government is expected to mount an offensive that could spark a humanitarian disaster.
· Oil prices were little changed on Tuesday, as energy infrastructure on the U.S. Gulf Coast braced for a hurricane, but gains were capped as a stronger dollar and report of rising stockpiles at the Cushing, Oklahoma hub weighed.
U.S. West Texas Intermediate (WTI) crude futures rose 7 cents to settle at $69.87 a barrel after earlier hitting a session high of $71.40. U.S. markets were closed on Monday for Labor Day.
Brent crude, which traded on Monday, was ended 2 cents firmer to settle at $78.17 a barrel, down from a session high of $79.72.
Both benchmarks jumped earlier in the session as more oil producers pulled employees out of Tropical Storm Gordon’s path and shut-in 9 percent of U.S. Gulf of Mexico oil and gas production on Tuesday.
Reference: Reuters
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