• The dollar edged lower against a basket of currencies on Thursday, as investors positioned themselves ahead of Friday’s highly anticipated jobs report for August.
The dollar index .DXY, which measures the greenback against a basket of six currencies, was down 0.13 percent at 95.061. The index hit a two-week high on Tuesday.
• On Thursday, the ADP National Employment Report showed private payrolls increased by 163,000 jobs last month. Economists polled by Reuters had forecast private payrolls increasing by 190,000 jobs last month.
• While the ADP report has a spotty record predicting the private payrolls component of the employment report, it was “perhaps a hint that employment growth has started to fade again after a very strong first half of the year,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
• While the Federal Reserve is on track to raise interest rates this month for the third time this year, Friday’s data will help shape the interest rate outlook, said Manimbo.
• The dollar extended earlier losses against the yen on Thursday after CNBC television reported that U.S. President Donald Trump told a Wall Street Journal columnist he might take on trade issues with Japan.
The greenback touched a session low of 110.51 yen in the wake of the CNBC report. At 4:20 p.m. (2020 GMT), it was down 0.75 percent at 110.69 yen.
• During a phone call with President Donald Trump, WSJ columnist James Freeman noted that the president sounded "still very focused on eliminating trade deficits with America's trading partners."
Trump "described his good relations with the Japanese leadership but then added: 'Of course that will end as soon as I tell them how much they have to pay," Freeman quotes the president saying.
• Many emerging market currencies, which have had a torrid few months, will bounce back at least partially against the dollar in a year as weakening growth momentum takes the shine off the greenback, a Reuters poll found.
The rand is expected to firm almost 10 percent to 14.00 per dollar in a year, the Brazilian real just over 8 percent to 3.79 per dollar, and the heavily-sold Argentine peso over 10 percent to 34.135 per dollar. [BRL/POLL]
“At these (current) levels, a lot of the bad news is priced in,” said Mike Keenan, a strategist at Absa Capital.
“We think the rand sell-off is probably overdone, even though we acknowledge it is vulnerable to tighter monetary policy conditions globally, twin deficits and an unwind of the carry trade.”
• New orders for U.S.-made goods fell slightly more than expected in July, weighed down by weak demand for aircraft, but signs of a pickup in business spending suggested that the manufacturing sector remained on solid ground.
• The number of Americans filing new claims for unemployment aid fell to near a 49-year low last week and private payrolls rose steadily in August, pointing to sustained labor market strength that should continue to underpin economic growth.
The Labor Department said on Thursday initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 203,000 for the week ended Sept. 1, the lowest level since December 1969.
• Current economic conditions are “as good as it gets” for the U.S. central bank, a key policymaker said on Thursday, with steady inflation and low unemployment allowing the Federal Reserve to continue gradually raising rates.
“We can continue to be relatively patient and allow this economy to continue to grow,” New York Federal Reserve bank President John Williams said at the University of Buffalo School of Management. There is “room to run” in the current recovery, he said, particularly with weak wage growth indicating some “slack” left in the labor market.
• The Federal Reserve will likely have to raise interest rates past the neutral rate to keep the economy on a sustainable growth path and inflation around target, according to Chicago Federal Reserve Bank President Charles Evans.
U.S. fiscal and monetary policymakers probably do not have enough ammunition to adequately battle a future economic downturn unless big changes are made to the tools they have, according to research by a Federal Reserve regional president.
• Existing policy buffers, including fiscal, monetary and banking regulations, “may not be sufficient to offset future shocks, reducing the capacity available to policymakers to insulate the economy from future adverse shocks,” Eric Rosengren, president of the Federal Reserve Bank of Boston, said in the paper, which is to be presented at a conference this weekend. Fiscal policies, in particular, are likely to help different U.S. states to different degrees, depending on what industries their economies rely on, leaving some far behind, the paper said.
• The ongoing U.S.-China trade war could also see an escalation today amid already tense relations between the two economic powerhouses, following reports which said the Trump administration could place tariffs on an additional $200billion worth of Chinese goods as soon as a public comment period ends at 12:00 p.m. HK/SIN today. China's commerce ministry has said the country would retaliate if the U.S. imposes new tariffs.
• China will be forced to retaliate if the United States implements any new tariff measures, China’s commerce ministry warned on Thursday, as the world’s two biggest economies remain locked in an intensifying trade war.
• Top aides to Donald Trump scrambled on Thursday to deny authorship of an anonymous New York Times opinion column that slammed the U.S. president’s leadership style and described “a quiet resistance” to him within his own administration.
By early afternoon, eight senior officials had disavowed the piece, including Vice President Mike Pence, Secretary of State Mike Pompeo and Defense Secretary James Mattis, while hammering the author for writing it and the Times for publishing it.
• U.S. House Speaker Paul Ryan said on Thursday he has a good understanding with President Donald Trump to fund the government by a Sept. 30 deadline, despite Trump’s comments a day earlier that he would be willing to shut down government if Congress does not provide enough border security funding.
• Talks between the United States and Canada on the North American Free Trade Agreement have taken place in a good atmosphere, Canadian Foreign Minister Chrystia Freeland said on Thursday, the second straight day of talks this week to save the pact.
But Freeland, speaking to reporters as she entered the afternoon session of talks with U.S. chief negotiator Robert Lighthizer, said that American tariffs on steel and aluminum imports should not be part of the NAFTA negotiations.
U.S. and Canadian negotiators pushed ahead in grinding talks to rescue the North American Free Trade Agreement on Thursday, but a few stubborn issues stood in the way of a deal, including dairy, protection for media companies, and how to solve future trade disputes.
A U.S. source familiar with the discussions in Washington said it was still unclear whether the two sides could bridge their gaps or whether U.S. President Donald Trump will opt for a Mexico-only bilateral trade deal.
• North Korea’s Kim Jong Un has given his first time line for denuclearization, aiming for the end of U.S. President Donald Trump’s first term, Seoul officials said on Thursday, prompting thanks from Trump who said they would “get it done together”.
Kim and South Korean President Moon Jae-in will meet in Pyongyang on Sept. 18-20 for a third summit and discuss “practical measures” toward denuclearization, Moon’s national security adviser, Chung Eui-yong, said a day after meeting Kim.
Kim told South Korean officials his faith in Trump was “unchanged” and that he wanted denuclearization of the Korean peninsula and an end to hostile relations with the United States before Trump’s first term ends in early 2021, Chung said.
But there was no indication that Kim had offered concrete steps toward giving up his nuclear arsenal, something some U.S. officials have said privately they doubt he is willing to do.
• Japan’s household spending rose 0.1 percent in July from a year earlier in price-adjusted real terms, government data showed on Friday, compared with economists’ median estimate of a 0.9 percent decline.
Japan’s household spending rose slightly in July after five straight declining months, offering policymakers some hope that a sustained economic recovery and a tight job market are making consumers more likely to spend.
• Crude futures reversed course, falling more 1 percent on Thursday after U.S. data showed gasoline inventories rose unexpectedly last week, overshadowing a bullish drawdown in crude.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 95 cents to settle at $67.77 a barrel, a 1.3 percent loss. Brent crude LCOc1 futures lost 77 cents to trade at $76.50 a barrel, a 1 percent loss.
Earlier, both contracts had traded higher, encouraged by a weaker dollar and evidence of strong U.S. fuel demand.
Reference: Reuters, CNBC
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