· The dollar was lower on Friday morning in the North American session as some optimism for the ongoing trade talks with China bolstered trade-linked currencies like the euro and the British pound.
Hopes that the United States and China may soon end their trade war after White House economic advisor Larry Kudlow said a deal was “getting close” lifted trade-exposed currencies on Friday at the expense of safe-haven assets such as the Japanese yen. Given the lack of concrete detail in Kudlow’s comments, however, markets mostly stayed cautious.
· “To be blunt, such rhetoric is more or less the same as Steven Mnuchin (who) said months ago that a deal was ’99% done’,” Commerzbank analysts wrote in a note to clients, though they acknowledged the comments had benefited sentiment.
They said the comments could not be taken seriously until the trade documents could be assessed and a deal was signed.
· The dollar fell 0.26% against the euro and 0.15% against the British pound, at $1.105 and $1.29 respectively. It rose 0.37% versus the yen, last at 108.79, suggesting an end to the past week’s dollar-yen slump may be in sight. The Swiss franc also weakened 0.16% versus the dollar.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.953 after seeing highs above 98.4 last week.
On Friday, the Commerce Department reported that U.S. retail sales rebounded in October, but consumers cut back on purchases of big-ticket household items and clothing, raising questions about the consumer strength currently underpinning the U.S. economy.
That may have also contributed to the rise in the euro and the pound.
· Chinese Vice Premier Liu He spoke with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer about a phase-one trade deal in a phone call Saturday morning, according to Chinese state media.
The two sides had “constructive discussions” about “each other’s core concerns” and agreed to remain in close contact, Xinhua reported. The call came at the request of Mnuchin and Lighthizer, according to Xinhua.
White House Economic Advisor Larry Kudlow said Friday that Washington and Beijing were close to a deal.
“We’re getting close,” Kudlow told an event at the Council on Foreign Relations in Washington. “The mood music is pretty good, and that has not always been so in these things.“
· Morgan Stanley forecasts that global growth will recover from the first quarter of 2020 onward as trade tensions and monetary police ease, reversing the downward trend of the past seven quarters.
“Easing trade tensions (the key factor in the global downturn) will reduce business uncertainty and make policy stimulus more effective,” the bank’s analysts said in its global outlook for 2020. The firm projects global economic growth of 3.2% next year, compared to 3% in 2019.
Much depends, however, on the outcome of U.S.-China trade talks and whether or not the Trump administration’s next round of tariffs, scheduled for Dec. 15, go into effect. If those tariffs are activated, global growth in the final quarter of this year will slow to 2.8% and a recovery will be delayed until the third quarter of 2020, according to Morgan Stanley.
· China’s central bank said on Saturday it will maintain prudent monetary policy to prevent inflation from spreading.
In its third quarter monetary policy report, the People’s Bank of China (PBOC) also said it was studying plans to switch the benchmark rate for existing loans to the new loan prime rate (LPR).
· Former New York Mayor Michael Bloomberg admitted he was wrong to support the “stop and frisk” police practice that ensnared disproportionate numbers of blacks and Latinos, apologizing to a largely African-American church on Sunday as he weighs a presidential bid.
“I was wrong. And I am sorry,” Bloomberg told the Christian Cultural Center, the New York Times reported, describing the center as a black megachurch.
His reversal comes as he considers whether to compete for the Democratic nomination for president, a contest in which African-American voters are highly influential
· U.S. President Donald Trump on Sunday told North Korean leader Kim Jong Un to “act quickly” to reach a deal with the United States, in a tweet weighing in on North Korea’s criticism of his political rival former Vice President Joe Biden.
Trump, who has met Kim three times since 2018 over ending the North’s missile and nuclear programs, addressed Kim directly, referring to the one-party state’s ruler as “Mr. Chairman”.
In his tweet, Trump told Kim, “You should act quickly, get the deal done,” and hinted at a further meeting, signing off “See you soon!”
North Korea said on Thursday it had turned down a U.S. offer for fresh talks ahead of a year-end deadline Pyongyang has set for Washington to show more flexibility in negotiations.
U.S. Defense Secretary Mark Esper announced in Thailand earlier on Sunday that joint U.S.-South Korean military drills would be postponed in an effort to bolster the stalled peace push.
Pyongyang’s official KCNA news agency in a commentary on Friday lashed out at Biden for insulting Kim, calling Biden a “rabid dog” that needs to be put down.
· Britain’s Conservatives will deliver Brexit and end the uncertainty and confusion that has “paralyzed” the economy if they are re-elected next month, Prime Minister Boris Johnson will tell business leaders on Monday.
The Dec. 12 election was called in a bid to end three years of disagreement over Britain’s 2016 vote to leave the European Union that has sapped investors’ faith in the stability of the world’s fifth largest economy and damaged Britain’s standing.
· Oil futures gained nearly 2% on Friday as comments from a top U.S. official raised optimism for a U.S.-China trade deal, but worries about increasing crude supplies capped prices.
Benchmark Brent crude gained $1.03, or 1.7%, to settle at $63.31 a barrel, while West Texas Intermediate crude rose 95 cents, or 1.7%, to settle at $57.72 a barrel. Brent and WTI both posted their second straight weekly gain.
U.S. Commerce Secretary Wilbur Ross said in an interview on Fox Business Network on Friday that there was a very high probability the United States would reach a final agreement on a phase one trade deal with China.
“We’re down to the last details now,” Ross said.
U.S.-China trade talks were set to continue with a telephone call on Friday.
· A monthly report from the International Energy Agency weighed on prices, after it estimated that non-OPEC supply growth would surge to 2.3 million barrels per day (bpd) next year compared with 1.8 million bpd in 2019, citing production from the United States, Brazil, Norway and Guyana.
· Hong Kong police on Monday trapped hundreds of protesters inside a major university and demonstrators rampaged through a tourist district, after almost two straight days of standoffs that have raised fears of a bloody showdown.
Police fired tear gas while protesters threw petrol bombs and fired arrows in clashes outside Hong Kong’s Polytechnic University on Saturday, just hours after Chinese soldiers made a rare appearance to help clean up the city’s streets.
China’s People’s Liberation Army (PLA) soldiers in shorts and t-shirts appeared in streets outside their base, helping residents clean up debris after anti-government protests blocked roads.
The presence of PLA troops on the streets, even to help clean up, could stoke further controversy over the Chinese-ruled territory’s autonomous status.
Reference: CNBC, Reuters
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