· The dollar and British pound were steady on Wednesday as European Union leaders consider Britain’s request for a Brexit delay, and are expected to grant a three-month extension to the Oct. 31 deadline for its departure.
European Council President Donald Tusk said on Twitter he had recommended late on Tuesday that EU leaders back a delay. British Prime Minister Boris Johnson was forced by parliament to ask for three months, but there is still a chance that some EU countries, notably France, could demand a shorter extension.
Johnson paused his bill to enact the Brexit deal he struck last week with the European Union’s 27 other member states, after dramatic votes on Tuesday in which the British parliament accepted the deal in principle but rejected a three-day timetable for passing the necessary legislation.
Foreign exchange trading was generally quiet following a sell-off Tuesday that saw the pound drop against both the dollar and the euro. Against the dollar, the pound was last down 0.02% to $1.287. Against the euro, the pound was 0.8% stronger to 86.34 pence.
The dollar index was up 0.08% at 97.606.
Safe haven currencies earlier Wednesday had been boosted by the Brexit uncertainty. But after the EU was seen as likely to approve an extension, gains in the Japanese yen and Swiss franc faded. The yen was last marginally lower at 108.55 per dollar, with the franc at 0.991 per dollar.
· The recent truce in the U.S.-China trade war is not an economic turning point and has done nothing to reduce a significant risk that the United States could slip into recession in the next two years, a Reuters poll of economists found.
Collateral damage from the trade conflict between the world’s two largest economies has hit financial markets and forced most major central banks to cut interest rates this year.
· Mario Draghi may be the man who saved the euro but his last press conference as President of the European Central Bank on Thursday is unlikely to be the grand finale he was hoping for.
Inflation in the euro zone languishes at less than half the ECB’s target, the economic outlook is darkening again and support for Draghi’s brand of aggressive money printing has never been lower among rate-setters.
· Economic growth across Asia is set to slow more than expected, according to the latest projections by the International Monetary Fund.
In its Regional Economic Outlook report released Wednesday, the IMF said growth in Asia could moderate to 5% in 2019, and 5.1% in 2020 — that’s 0.4% and 0.3% lower than its April projections.
· The People’s Bank of China is choosing not to follow many other major central banks in cutting interest rates as it tries to navigate a challenging economic environment.
China’s central bank must manage an economy structured in many ways quite differently from that of other major regions, such as Japan or the European Union. But the PBoC faces the same question of how effective monetary policy can be today. That has significant implications for the central bank’s signalling, which appeared to take a neutral stance on Monday.
· South Korea’s economy grew less than expected in the third quarter, and though exports showed signs of steadying the overall outlook was clouded by a domestic spending slump and intensifying global risks from trade frictions .
The Bank of Korea’s advance estimates showed on Thursday the economy grew 0.4% during the July-September period on-quarter, down from a 1.0% rise in the second quarter and just missing a 0.5% gain forecast in a Reuters survey of 26 economists.
Exports rose 4.1% in the third quarter after a 2.0% gain in the second quarter, which reversed a successive run of contractions for two quarters. But private consumption grew just 0.1% and construction spending tumbled 5.2%.
Economists said exports, the most important driver of growth for Asia’s fourth-largest economy, appeared to have clearly passed the trough, although a sure-footed recovery in the economy would require more policy support.
· Chile´s central bank on Wednesday slashed its benchmark interest rate to 1.75% from 2%, its third major rate cut since June, as protests over economic inequality rocked the South American nation.
· North Korean leader Kim Jong Un and U.S. President Donald Trump continue to have close relations and trust, with Kim calling the relationship “special,” North Korea’s state news agency KCNA said on Thursday.
The statement comes after North Korea earlier this month broke off working-level talks with the United States in Sweden, pushing denuclearization negotiations back into limbo after what had been months of stalemate.
· Oil rose 2.7% on Wednesday after government data showed a surprise draw in U.S. crude stocks and as the prospect of deeper output cuts by OPEC and its allies offered support.
U.S. crude stocks fell 1.7 million barrels last week as refineries hiked crude runs by 429,000 barrels per day (bpd) and oil imports fell, the Energy Information Administration said. Analysts had expected an increase of 2.2 million barrels.
Brent crude futures gained $1.39, or 2.3%. West Texas Intermediate (WTI) crude futures gained $1.49, or 2.7%, to settle at $55.97 per barrel.
Reference: CNBC, Reuters
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