· The U.S. dollar fell against the Japanese yen on Thursday as investors pushed into safe-haven assets on reports the United States and China were struggling to finalise a “phase one” trade deal and as the domestic impeachment inquiry into U.S. President Donald Trump intensified.
The Japanese yen was up 0.39% to 108.4 against the dollar, having risen to a 10-day high earlier in the session. The Swiss franc also benefited, up 0.16%, with the dollar index down 0.22% to 98.159. That risk-off move also bolstered U.S. Treasury bond prices and hit the Dow Jones and Nasdaq indexes, which also contributed to the dollar’s fall.
The Financial Times on Thursday afternoon reported that China and the United States were struggling to reach a “phase one” deal and may not settle ahead of Dec. 15, when U.S. tariffs on Chinese goods are set to go into effect. Washington, according to Financial Times sources, does not yet believe Beijing has made sufficient concessions on matters including intellectual property and agricultural purchases to warrant a roll-back.
House of Representatives Speaker Nancy Pelosi said on Thursday that Trump already has admitted to bribery in the Ukraine scandal at the heart of a Democratic-led inquiry, accusing him of an impeachable offence under the U.S. Constitution.
Also on Thursday, the Labor Department reported that U.S. producer prices increased by the most in six months in October, further bolstering the Federal Reserve’s stance that it will probably not cut interest rates again in the near term.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 98.163 after slipping from levels above 98.37 earlier.
· U.S. Treasury yields slipped Thursday as investors eyed weakening economic data in Asia, along with political jitters around the globe and uncertain progress toward a partial U.S.-China trade pact.
The 10-year Treasury note yield TMUBMUSD10Y, +1.18% fell 5.5 basis points to a one-week low of 1.815%, while the 30-year bond rate TMUBMUSD30Y, +0.86% tumbled 5.2 basis points to 2.299%. The two-year note yield TMUBMUSD02Y, +1.05% slipped 3.7 basis points to 1.591%.
· Ten-year bond yields across the euro area fell around 2 basis points each. Germany, French and Dutch yields reached one-week lows,.
France’s 10-year bond yield slipped back into negative territory a week after it turned positive for the first time since July. Germany’s Bund yield fell to a low of -0.353%, down from last week’s three-and-a-half-month low around -0.22%.
· China is still calling for the U.S. to roll back tariffs as part of any “phase one” agreement, as trade negotiations between the world’s two largest economies drag on.
“The trade war was begun with adding tariffs, and should be ended by canceling these additional tariffs. This is an important condition for both sides to reach an agreement,” China’s Ministry of Commerce spokesperson Gao Feng said at a weekly press conference Thursday, according to a CNBC translation.
· House of Representatives Speaker Nancy Pelosi said on Thursday President Donald Trump already has admitted to bribery in the Ukraine scandal at the heart of a Democratic-led inquiry, accusing him of an impeachable offense under the U.S. Constitution.
Democrats are looking into whether the Republican president abused his power by withholding $391 million in U.S. security aid to Ukraine as leverage to pressure Kiev to conduct two investigations that would benefit him politically. The money, approved by Congress to help a U.S. ally combat Russia-backed separatists in the eastern part of the country, was later provided to Ukraine.
· Britain’s opposition Labour Party said it would unveil plans on Friday to provide free ‘full-fiber’ broadband across the country by creating a ‘British Broadband’ public service, formed by bringing parts of telecoms provider BT back into state ownership.
Labour said if it wins a Dec. 12 election it would carry out a massive upgrade of Britain’s internet infrastructure, starting by targeting rural and remote communities and some inner city areas with the worst broadband access.
· Shinzo Abe may be about to become Japan’s longest-serving prime minister, but he also looks set to lead the world’s third-largest economy into a downturn, with little sign that his much-vaunted “Abenomics” stimulus policies will help turn things around.
The economy grew at the slowest rate in a year in the third quarter, data showed on Thursday, as the U.S.-China trade war and soft global demand took their toll on exports.
There is near market consensus that it will contract outright in October-December, as consumers take the hit from an October sales tax hike and the fallout from the trade war widens.
Analysts polled by Reuters prior to Thursday’s data expect the economy to shrink 2.5% in October-December and rebound just 0.6% the following quarter - only narrowly avoiding a recession.
· Hong Kong is expected to confirm on Friday it plunged into recession for the first time in a decade, amid concerns the economy could be in even worse shape than feared as months of anti-government protests take a heavy toll.
Preliminary figures in October showed the Chinese-ruled city’s economy shrank by 3.2% in July-September from the preceding period, contracting for a second straight quarter and meeting the technical definition of a recession.
With no end to the increasingly violent protests in sight, analysts say the slump could be long and deep, with gross domestic product seen shrinking further this quarter and well into next year.
· Oil prices fell on Thursday as U.S. crude futures were pressured by a build in domestic inventories and record production, while forecasts from the Organization of the Petroleum Exporting Countries for a lower-than-expected oil surplus supported Brent.
Brent futures fell 7 cents to settle at $62.30 per barrel, while West Texas Intermediate crude futures fell 35 cents, or 0.6%, to settle at $56.77.
U.S. crude stockpiles grew last week by 2.2 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.649 million-barrel rise, as production hit a record high, the Energy Information Administration said.
Crude production rose by 200,000 barrels per day (bpd) to a weekly record of 12.8 million bpd, the EIA said in its weekly report delayed a day by Monday’s U.S. Veterans Day holiday.
Reference: CNBC, Reuters, Market Watch
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