· The yen rose against the dollar on Thursday after sources close to the White House told Reuters that a U.S.-China trade deal is unlikely this year, shattering investor hopes a partial agreement was imminent and spurring demand for safe havens.
The yuan fell to a three-week low in onshore trade on worries the failure to reach a deal to roll back U.S. tariffs could further harm China’s stuttering economy.
The yen JPY=EBS rose 0.15% to 108.46 per dollar on Thursday.
The dollar was steady at $1.1077 versus the euro EUR=EBS and was quoted at $1.2931 against the British pound GBP=D3.
In the onshore market, the yuan CNY=CFXS fell to 7.0450 versus the dollar, the weakest since Nov. 1, before steadying at 7.0400. Offshore, the yuan CNH=D3 slipped to 7.0533 per dollar, the lowest since Nov. 5, and then pared its losses.
· U.S. President Donald Trump said on Wednesday he has not made a trade deal with China yet because Beijing is not “stepping up” in negotiations.
“I don’t think they’re stepping up to the level that I want,” Trump told reporters after touring a plant in Austin that assembles Apple Inc computers.
President Donald Trump said on Wednesday after touring a plant that assembles Apple Inc (AAPL.O) computers that he was considering whether to exempt the U.S. company from tariffs on imports from China.
“We’re looking at that,” Trump said in answer to a reporter’s question about the tariffs, after touring a plant in Austin, Texas, with Apple Chief Executive Tim Cook that assembles the company’s Mac Pro desktop computers.
· Singapore’s economy grew faster than initially estimated in the third quarter, official data showed on Thursday, confirming the bellwether Asian economy comfortably escaped a recession helped by an improving manufacturing sector.
The government also narrowed its official growth forecast for 2019 to 0.5% to 1.0% to the upper half of its previous 0.0% to 1.0% projection range.
Gross domestic product (GDP) rose 0.5% year-on-year, faster than the 0.1% growth seen in the government’s advance estimate and matching the 0.5% predicted in a Reuters poll.
· An anticipated “phase one” trade deal between the U.S. and China will likely be inked, but the subsequent stages “remain distant,” according to one strategist at Morgan Stanley.
“Our base case is that the phase one trade deal gets done and that might be about as good as it gets, that phase two and phase three remain distant next year,” Andrew Sheets, chief cross-asset strategist at Morgan Stanley, told CNBC at the Morgan Stanley APAC Summit on Thursday.
“I think as markets have rallied over the last month, expectations for that phase one have become quite high and so that obviously increases the risk that if it’s not delivered, markets will be disappointed by that,” Sheets said.
· Economic growth in China is slowing down amid an ongoing trade war with the U.S. — but Swiss wealth management giant UBS is not budging from its “overweight” position in Chinese stocks.
“I think what’s been very interesting with regards to the Chinese market is that even though growth is slowing, you can actually see that the economic restructuring that they have been trying to pursue is actually bearing fruit,” Tan Min Lan, the wealth manager’s head of chief investment office in Asia Pacific, told CNBC’s “Street Signs” on Thursday.
“If you look at the third-quarter reporting season, overall earnings growth is closer to about 10% year-on-year growth, which is an acceleration in the second quarter which is about 5%,” she said. “We think that Chinese stock market continues to have a lot of interesting opportunities that one can pursue.”
· U.S.-China relations will worsen if President Donald Trump signs a pro-Hong Kong rights bill into law, a former American ambassador to China said on Thursday.
“I don’t think this bill is going to help protesters achieve their goals. Second, it has an impact on U.S.-China relations. I think this is going to worsen relations,” said Max Baucus, who was appointed ambassador by President Barack Obama.
“It sounds good for American politicians. It sounds good for President Trump. (There’s a) wonderful top line vision to it: standards for human rights,” said Baucus.
“It’s very hard in the current political climate in Washington D.C. which has near hysterical reactions against China to not sign the bill of human rights,” he added.
· The U.S. House of Representatives on Wednesday passed two bills to back protesters in Hong Kong and send a warning to China about human rights, with President Donald Trump expected to sign them into law, despite delicate trade talks with Beijing.
President Trump has 10 days, excluding Sundays, to sign a bill passed by Congress, unless he opts to use his veto.
A person familiar with the matter said the president intended to sign the bills into law, not veto them.
Vetoes would have been difficult to sustain, since the measures passed both the Republican-controlled Senate and Democratic-controlled House with almost no objections.
· China will strive to reach a “phase one” trade agreement with the United States as both sides keep communication channels open, the Chinese commerce ministry said on Thursday, in an attempt to allay fears talks might be unraveling.
· There is some cognitive dissonance at work when it comes to China’s economy. The market believes that 6% growth is a line in the sand for Beijing and GDP cannot be allowed to go below that, but at the same time everybody knows that at some point it will.
The debate should be just how soon will China “allow” GDP to drop below the psychological 6% level, and when this happens, will it make much of a difference in the real world?
· Oil prices edged lower on Thursday as fresh tensions between the United States and China over ongoing protests in Hong Kong fueled concern that a long hoped-for deal to end a trade war between the world’s top two economies may be further delayed.
Trade experts have warned the first phase of a deal could slide into next year, while markets are wary negotiations might take a hit as the U.S. House of Representatives passed two bills to back protesters in Hong Kong, much to the disapproval of China.
Brent crude futures LCOc1 dipped 22 cents, or 0.35%, to $62.18 a barrel by 0611 GMT, while West Texas Intermediate (WTI) crude futures CLc1 fell 20 cents, or 0.35%, to $56.81 per barrel. Both benchmarks had risen strongly on Wednesday on bullish U.S. crude inventory data.
Reference: Reuters, CNBC
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