· The yen strengthened on Monday, thanks to bigger appetites for safe-haven assets as Washington and Beijing put additional tariffs on each other’s exports, adding to the gloom hanging over the global economic outlook.
Gold, which tends be bought with the yen during times of economic uncertainty, also rose on Monday by the most in almost a week as investors were drawn to so-called risk-off trades.
The offshore yuan initially fell trading but pared its losses after a private survey on Chinese manufacturing in August beat market expectations.
Declines in Asian shares on Monday offered more evidence that traders were steering from risk, which is likely to be an important factor behind currency market swings in coming weeks.
The yen rose around 0.1% versus to dollar to 106.15 in Asian trading.
The Japanese currency rose around 0.2% to 71.43 versus the Australian dollar and advanced around 0.2% to 66.88 per New Zealand dollar.
rose 0.29% to $1,524.05 per ounce.
In the onshore Chinese market, the yuan traded at 7.1611 per dollar, versus its previous close of 7.1580.
In the offshore market, the yuan initially fell versus the dollar but managed to trim its losses to trade at 7.1686 yuan per dollar, down around 0.1%.
The dollar index against a basket of six major currencies was little changed on Monday at 98.821.
The euro stood at $1.0991, unchanged in Asia, but sentiment for the common currency was weak after it tumbled on Friday to the lowest in more than two years.
· The bitter trade war between China and the United States kept Asian factory activity mostly in decline in August, business surveys showed, strengthening the case for policymakers to unleash fresh stimulus to fend off recession risks.
In a surprise development, China’s factory activity unexpectedly expanded in August as output edged up, a private sector purchasing managers’ index (PM) showed on Monday, but orders remained weak and business confidence faltered.
Export-reliant South Korea, Japan and Taiwan also saw factory activity shrink, underscoring the growing pain from the tit-for-tat tariff war between the world’s two-largest economies.
· China is moving slowly in the implementation of retaliatory tariffs as trade tensions with the U.S. escalate.
The Chinese government pushed ahead Sunday with increased duties of between 5% and 10% on a variety of major American goods exported to China, including soybeans and crude oil.
However, the proportion of tariffs that kicked in on Sunday only account for about one third of the more than 5,000 product lines listed in the latest announcement. The majority of the duties will take effect Dec. 15, and China’s plans to reinstate tariffs on U.S. autos and auto parts will also not take place until that time.
A report by Panjiva, a supply chain data company that’s part of S&P Global Market Intelligence, pointed out that the products in the Sept. 1 group may have been chosen since those items saw some recovery in shipments rather than further decline. The Aug. 27 analysis pointed out that U.S. exports in the Sept. 1 group fell by 15.2% in the second quarter from a year ago, versus a drop of 20.4% for the Dec. 15 group.
Here is a selection of some of the U.S. goods that China raised tariffs on this past Sunday, some of which have appeared on previous lists for higher duties:
China’s manufacturing activity expanded in August, according to results of a private survey released on Monday as production increased, but export sales fell amid the country’s escalating trade war with the U.S.
The Caixin/Markit factory Purchasing Managers’ Index (PMI) was 50.4 in August — better than than the 49.8 analysts polled by Reuters had expected. The Caixin/Markit manufacturing PMI was 49.9 in July.
PMI readings above 50 indicate expansion, while those below that signal contraction.
The subindex for new orders stayed in expansionary territory in August, but inched down from July, suggesting flat demand for manufactured products, said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin.
However, “the gauge for new export orders remained in contractionary territory and fell to the lowest level this year in August, reflecting declining foreign demand amid an intensifying trade dispute between China and the U.S., ” Zhong said in a press release.
“Overall demand didn’t improve, and foreign demand declined notably, leading product inventories to grow,” he wrote. “There was no sign of an improvement in companies’ willingness to replenish inventories of inputs or in their confidence. Industrial prices trended down.”
· Any deal that the U.S. and China eventually reach may lack “strategic trust” — and that could have “dangerous” implications for the global economy, Singapore’s trade minister warned on Monday.
The tariff war between the world’s two largest economies has lasted more than a year, and has hit business sentiment and roiled financial markets. The dispute, which spilled over to other areas such as technology, is often cited as a major risk weighing on economic growth worldwide.
On Sunday, both the U.S. and China imposed fresh tariffs on each other’s goods. Both sides have indicated they would continue negotiating for a deal. But Chan Chun Sing, the Singaporean minister for trade and industry, said he’s not sure they will be able to resolve their differences soon.
He explained that both sides have to make sure their objectives of reaching an agreement are aligned. Otherwise, a U.S.-China deal will still leave the global economy fragmented, he added.
“Even if they get a deal, or whatever deal that they get ... I think the lack of strategic trust will be the more important factor,” the minister told CNBC’s “Squawk Box.”
· China’s natural gas consumption growth rate is expected slow to around 10% in 2019, from 17.5% last year, amid easing economic growth and pressure on the country’s production, storage and sales network, a government report published on Saturday showed.
The research report, conducted by the oil and gas department at the National Energy Administration, forecast
consumption to be about 310 billion cubic meters, and to continue growing until 2050.
· Argentina’s government has imposed currency controls in a bid to stabilize financial markets, as Latin America’s third-largest economy faces a deepening economic crisis.
The temporary measures, announced on Sunday, allow the government to restrict foreign currency purchases following a sharp drop in the super-sensitive peso.
All companies must now request permission from Argentina’s central bank to sell pesos and buy foreign currency to make transfers abroad.
The measures — which will remain in place until the end of the year — constitute a startling turnabout for President Mauricio Macri.
· Hong Kong on Sunday saw it’s most violent day since mass protests broke out in the city thirteen weeks ago.
While many people were supportive of the hundreds of thousands that took to the streets at the beginning of the movement, fewer are sympathetic to the “radical protesters,” an investment consultant told CNBC Monday.
On Sunday, thousands of demonstrators blocked roads and public transportation routes to the Hong Kong International Airport, saying they hope to draw the world’s attention to their pro-democracy movement.
“We’re now seeing, really, what can only be described as mindless vandalism from the radical protesters,” said Richard Harris, chief executive of consulting investment management firm Port Shelter Investment.
· Oil prices weakened on Monday after new tariffs imposed by the United States and China came into force, raising concerns about a further hit to global growth and demand for crude.
Brent crude slipped 22 cents, or 0.4%, to $59.03 a barrel by 0620 GMT, while U.S. oil was down 2 cents at $55.083 at barrel.
The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions - as China put new duties on U.S. crude, the latest escalation in a bruising trade war.
Reference: CNBC, Reuters, Daily FX
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