· The pound traded near a five-month high against the dollar and the euro after Britain’s prime minister Boris Johnson and European Union leaders agreed a new deal for Britain to exit the bloc.
The pound GBP=D3 traded at $1.2853 on Friday, close to a five-month high of $1.2988 reached on Thursday after EU leaders unanimously backed the new Brexit deal with Britain.
For the week, the pound was on course for a 1.6% gain versus the dollar and a 0.7% rise against the common currency.
The yuan held steady against the dollar after data showed China’s economy grew at the weakest pace in more than 27 years in the third quarter due to a costly trade war with the United States and weak factory production.
In the onshore market, the yuan CNY=CFXS traded at 7.0779 per dollar little changed on the day. In the offshore market, the yuan CNH=D3 was quoted at 7.0797 versus the greenback.
Sterling’s gains on the dollar helped push the greenback to a five-month low versus the euro and a three-week low against the Swiss franc.
Worries about weak U.S. economic data kept the greenback lower against other currencies.
The dollar traded at 0.9873 Swiss franc CHF=EBS, close to the lowest since Sept. 25 and on course for its biggest weekly decline since Aug. 9.
The dollar JPY=EBS was quoted at 108.56 yen, headed for its second week of gains.
· US Dollar Price Volatility Report: Will China GDP Spark Havens?
The US Dollar selloff continues to gain pace and has pushed the DXY Index well below the 98.00 price level. Yet US Dollar downside over the last two to three weeks is owed primarily to significant gains in EURUSD and GBPUSD driven by Brexit optimism.
Nevertheless, greenback weakness has begun to accelerate and spillover to other major US Dollar currency pairs like USDCHF and AUDUSD. As such, the US Dollar’s longstanding bullish trend could be in serious jeopardy if the DXY Index fails to quickly rebound off nearby technical support.
This area of confluent support is also underpinned by its 20-SMA. If the US Dollar fails to catch bid at this major technical level, however, the 50-week simple moving average in addition to the 23.6% Fibonacci retracement of the DXY Index’s trading range since 2018 around the 97.00 handle could potentially keep USD price action afloat.
· Voting down Prime Minister Boris Johnson’s Brexit deal will open up better opportunities for the government and the Northern Irish party which supports him in government will be lobbying other lawmakers to rebel, its Brexit spokesman said.
Sammy Wilson, a lawmaker for the Democratic Unionist Party, told BBC Radio that the party’s 10 lawmakers in Westminster will vote against Johnson’s deal when it comes before parliament in an extraordinary sitting on Saturday.
· Here’s how Boris Johnson’s Brexit deal differs from Theresa May’s
1. Under the revised deal, Northern Ireland will be part of the U.K. customs territory – not the European customs region. Some U.K. lawmakers had rejected the previous deal because Northern Ireland would have been in a separate customs area from the rest of the United Kingdom.
2. Nonetheless, under the new deal, Northern Ireland will still have to apply certain EU rules, including on agricultural products.
3. Northern Ireland will have to provide “democratic consent” in order for this agreement to continue to apply in the future. Specifically, the Northern Ireland assembly (the devolved legislature in the country) will be able to vote on whether to continue with this arrangement four years after the transition period ends in December 2020. According to Michel Barnier, the EU’s Brexit negotiator, this democratic vote is “a cornerstone” of the newly agreed approach. Often, throughout the Brexit process, lawmakers from Northern Ireland, had insisted they should have a say on its post-Brexit future.
4. Products from Northern Ireland can be branded “from the United Kingdom.”
5. The U.K. will collect VAT (valued-added tax) from Northern Ireland, meaning revenues that result from transactions that are taxable in Northern Ireland shall not be remitted to the EU.
6. There will be a new working group to oversee application of this protocol, meeting once a month and co-chaired by the EU and the U.K.
· The recently signed US-Japan trade deal would boost Japan's gross domestic product (GDP) by about 0.8% and create about 280,000 jobs In Japan, the Japanese government said on Friday.
The two countries signed a deal last week under which Japan will open its market for agricultural products such as beef and pork and the US will remove or reduce its tariffs on imports of Japanese industrial goods such as machinery, according to the Japan Times. The two countries are seeking to put the trade pact into force on Jan. 1.
· Japan’s core consumer inflation slowed to near 2-1/2-year lows in September, dragged down by sliding energy prices and raising the chance the central bank will top up its already massive monetary stimulus at its review this month.
The nationwide core consumer price index (CPI), which includes oil products but excludes fresh food prices, rose 0.3% in September from a year earlier, matching a median market forecast and slowing from a 0.5% gain in August.
Japanese Finance Minister Taro Aso said on Thursday the government was ready to take fiscal measures flexibly if the economy needed additional support to fend off external risks.
· Japan’s exports probably shrank for a 10th straight month in September, a Reuters poll found on Friday, in a sign that slumping global demand and the U.S.-China trade war was continuing to weigh on the nation’s shipments.
Exports in September are expected to have declined 4.0% from a year earlier, the poll of economists showed, though the pace of decline slowed from an 8.2% drop in August.
Imports are forecast to have fallen 2.8% from a year earlier, which will see the trade balance swing back to a surplus of 54 billion yen ($497.51 million) from a revised deficit of 143.5 billion yen in August.
· China’s economic growth slowed more than expected to 6.0% year-on-year in the third quarter, the weakest pace in almost three decades, hit by soft factory production amid a bruising Sino-U.S. trade war and lackluster demand at home.
Friday’s data marked a further loss of momentum for the economy from the second quarter’s 6.2% growth, likely raising expectations that Beijing needs to roll out more measures to ward off a sharper slowdown.
The third-quarter performance was also at the bottom end of the government’s full-year economic growth target of 6.0%-6.5%.
· European Union leaders will discuss a new budget plan on Friday that could allow the bloc to spend up to 1.1 trillion euros ($1.2 trillion) in the 2021-2027 period, but deep divisions among governments could block a deal for months.
· Hong Kong is preparing for a weekend of demonstrations, including a human chain at major subway lines on Friday and a democracy march on Sunday, the latest moves in more than four months of anti-government protests.
· Turkish President Tayyip Erdogan said on Twitter on Thursday he is confident that joint efforts with the United States will promote peace and stability after the two sides agreed to pause Turkey’s military offensive in northeastern Syria.
· Oil prices slid on Friday on jitters over demand from China after the world’s largest oil importer recorded its weakest quarter of economic growth in nearly three decades, dragged down by a trade dispute with the United States.
Global benchmark Brent crude oil futures LCOc1 fell by 21 cents, 0.4%, to $59.70 a barrel by 0646 GMT.
U.S. West Texas Intermediate (WTI) crude CLc1 futures edged down by 4 cents, or 0.1%, to $53.89 per barrel.
In the third quarter, China’s gross domestic product (GDP) growth slowed to 6% year-on-year, its weakest pace in 27-1/2 years and below expectations, dogged by soft factory production amid ongoing trade tensions with United States and sluggish domestic demand.
· CRUDE OIL TECHNICAL ANALYSIS
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