· The dollar dipped against the euro on Tuesday, a day before the Federal Reserve was expected to cut U.S. interest rates, while sterling dipped as Britain looked likely to go to election in December.
Investors will watch the conclusion of the U.S. central bank’s two-day meeting, and the dollar may gain if the Fed indicates reluctance to cut rates more.
Were looking for a hawkish reaction, which would lean toward a stronger dollar, said Mark McComick, North American head of FX strategy at TD Securities in Toronto. Given that markets are looking for the Fed to prop up the economy over the coming months, I think them signaling a little bit of a pause would kind of reinforce some consolidation in the dollar, especially against euro and sterling which have been driven by the Brexit euphoria, he said.
Increasing optimism that Britain will reach a deal to avoid a disorderly exit from the European Union has supported the euro and sterling recently. Still, the pound dipped on Tuesday in choppy trading after Prime Minister Boris Johnson won parliament’s preliminary approval to hold Britain’s first December election in almost a century in a bid to break the Brexit deadlock.
On Monday, the EU agreed to a three-month flexible delay to Britain’s departure. Sterling fell 0.04% against the dollar to $1.2857. It has risen from $1.2193 on Oct. 8, but is below a five-month high of $1.3012 reached on Oct. 21.
· The United Kingdom is to hold a December general election for the first time since 1923 in a bid to break the Brexit impasse.
On Tuesday evening, lawmakers from parties across the U.K. Parliament voted by 438 to 20 to hold a nationwide poll on December 12. Amendments to the bill, including an alternative Dec. 9 election date and a lowering of the voting age to 16, were earlier rejected.
The bill will now go to the House of Lords — Parliament’s upper house — for further debate on Wednesday, although this is unlikely to derail the decision made by MPs (Members of Parliament) in the lower chamber.
Ultimately, the electorate will have a choice between an emboldened Johnson pushing for his Brexit deal or a socialist government under Labour leader Jeremy Corbyn renegotiating the deal before another referendum.
The election result will be announced in the early hours of Friday the 13th. If no party wins conclusively, the Brexit deadlock would continue.
· The United States and 22 other countries at the United Nations pushed China on Tuesday to stop detaining ethnic Uighurs and other Muslims, prompting China’s U.N. envoy to warn it was not “helpful” for trade talks between Beijing and Washington.
· China will eliminate all restrictions on foreign investments not included in its self-styled “negative lists,” a vice commerce minister said on Tuesday, and also will “neither explicitly nor implicitly” force foreign investors and companies to transfer technologies.
· The Chinese government’s latest efforts to make it easier for foreign businesses to operate locally come as China’s own companies seek to be global players.
· Japanese bank Nomura downgraded Chinese telecommunications firm ZTE, saying there would be a temporary slowdown in demand as the shift to 5G equipment has not fully picked up.
It also warned of a risk of escalation in the conflict between the U.S. and China in the tech sector.
In a report on Tuesday, Nomura downgraded Hong Kong-listed ZTE shares from a “buy” rating to “neutral.”
· Oil finished lower on Tuesday, extending Monday’s losses, pressured by expectations for a rise in U.S. crude inventories and fading optimism over a U.S.-China trade deal.
U.S. crude inventories are expected to have risen by around 700,000 barrels last week, according to a Reuters poll of analysts. The first of two weekly supply reports, from the American Petroleum Institute, is due at 2030 GMT.
Oil markets are expected to face excess supplies in 2020 due to a production boost amid weak demand growth, the director for energy markets and security at the International Energy Agency said Tuesday.
“Overall, we will continue to see a well supplied market in 2020,” said Keisuke Sadamori at the Singapore International Energy Week.
Brent crude lost 3 cents, trading at $61.54 a barrel, having fallen 45 cents on Monday. U.S. West Texas Intermediate fell 27 cents, or 0.5%, to settle at $55.54.
Reference: Reuters, CNBC
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