· The dollar headed for its highest weekly finish against the safe-haven yen since May on Friday, as data showing the U.S. economy on a firm footing prompted investors to scale back rate-cut bets.
On Friday, the dollar was steady at 109.51 Japanese yen JPY=, and if it holds there will post a 0.7% gain for the week and hit its highest weekly close since May 31. Overnight trade was light with U.S. desks closed for Thanksgiving.
The British pound GBP= has been the week's other main beneficiary, adding half a percentage point as Prime Minister Boris Johnson's Conservative Party has firmed in opinion polls ahead of the Dec. 12 election.
Sterling was steady on Friday at $1.2910, while the euro EUR= held at $1.1012.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 98.37 after earlier touching lows below 98.3.
· ‘Phase one’ deal unlikely to be a real victory for China or the US, economist says
As investors await further developments in U.S.-China trade deal, an economics expert told CNBC Wednesday that the signing of a phase one trade deal between won’t be a real victory for either side.
Speaking to CNBC’s “Street Signs Europe,” Keyu Jin, associate professor of economics at London School of Economics, described the phase one agreement as a “face deal” that would allow both sides to say they’ve made some progress.
“It’s kind of a big gift for President Trump because we’ve seen the stock markets really,” she said. “But the phase one deal’s really about the resolvable negotiable stuff in the first place — the more difficult non-negotiable items are put back, delayed, and we don’t really know what’s going to come out of that. So unless old tariffs can be rolled back for China it can’t really be seen as a victory for them, or much for the U.S. because the more intractable problems are still there.”
She added that even some of the more difficult issues that had been negotiated in the deal — like those surrounding intellectual property and the opening up of Chinese markets — didn’t mark a huge breakthrough.
“That’s what the Chinese want to do anyway, it’s consistent with their longer-term goals,” Jin explained. “There’s so much of a focus on technology and innovation these days coming from the government, coming from the private sector, (intellectual property) protection is absolutely critical.”
According to Jin, however, even if China agrees to make concessions around certain laws or regulations, it may still take a while for tangible change to be delivered.
“There’s a difference between what’s written in the law and actual enforcement. Lots of things are written in the law, the legal system is quite comprehensive, the patent protection mechanism is there, it’s really about enforcement,” she said.
“Enforcement is tricky because it involves a lot of local government, local private firms, that the central government doesn’t have a complete control over. They are taking substantive steps to make sure that enforcement will also take place, but that will take time,” Jin added.
· Hong Kong is the biggest geopolitical threat to markets, economist warns
Ongoing civil unrest in Hong Kong is the biggest geopolitical threat to global markets, an economist told CNBC Thursday.
Speaking to CNBC’s “Street Signs Europe,” Holger Schmieding, chief economist at Berenberg, said the worst-case scenario was “pretty clear” after President Donald Trump signed two bills backing protesters in Hong Kong.
The move reignited tensions between Washington and Beijing, with China’s Ministry of Foreign Affairs accusing the U.S. on Thursday of having “sinister intentions.”
“Hong Kong at the moment is the biggest geopolitical risk out there for markets,” Schmieding told CNBC.
“If the situation in Hong Kong escalates badly, if we get a Chinese heavy-handed military intervention, then it would be nearly impossible for the U.S. to conclude a trade deal with China — even a stage one deal — it would be nearly impossible for the EU to do that, so that would prolong the global industrial downturn which is caused by trade tensions.”
· A US law supporting pro-democracy protesters in Hong Kong may unsettle trade talks with China, but is unlikely to derail them, analysts say.
Michael Hirson at Eurasia Group said that Mr Trump's signing of the bill "will not derail trade negotiations".
"To be sure, Beijing is angered at the US for interfering in what China considers its domestic affairs and for emboldening the protest movement," he said.
"But some of China's anger over the bill is posturing for the domestic audience, and Beijing will not be so upset as to let this stand in the way of a truce over trade."
The US also wants to avoid higher costs and economic hardship for American consumers, particularly ahead of US elections next year.
· Election season is entering its final lap in Taiwan, and comes amid allegations of severe meddling by the mainland China government.
This week, Taiwan detained two executives at a Hong Kong-listed firm on suspicion of violating national security, Reuters reported. They were detained in Taipei to help with investigations over allegations — by a Chinese asylum seeker in Australia — that China interfered in Taiwan and Hong Kong.
The detention of the two men came less than two months before Taiwanese head to the polls with incumbent President Tsai Ing-wen seeking a second term. Her popularity was bolstered amid her increasingly confrontational stance against the Chinese Communist Party as social unrest in Hong Kong dragged on.
· Japan’s factory output fell 4.2% in October, government data showed on Friday, more than the median market forecast for a 2.1% fall and swinging from a 1.7% rise.
· Japan’s retail sales tumbled at their fastest pace in more than 4-1/2 years in October as a sales tax hike prompted consumers to cut spending, raising a red flag over the strength of domestic demand.
The Japanese government increased the nationwide sales tax to 10% from 8% on Oct. 1, in a bid to fix the industrial world’s heaviest public debt burden, which is more than twice the size of the country’s gross domestic product.
· South Korea’s trade ministry said on Friday it had agreed to hold senior-level talks with Japan in the third week of December to discuss export controls.
The planned talks are aimed to contribute to resolving “pending issues” between the countries, the ministry said in a statement, meaning Japan’s recent export restrictions including tighter rules on high-tech materials exports to South Korea.
· Oil prices ended mixed on Thursday, with U.S. prices rebounding modestly from concerns that arose from U.S. President Donald Trump signing into law a bill backing protesters in Hong Kong, fuelling tensions with China.
Brent crude lost 14 cents, or 0.2%, at $63.92 a barrel, paring earlier losses.
West Texas Intermediate crude reversed losses to close up 13 cents, or 0.2%, at $58.24, with many U.S. traders away for the Thanksgiving holiday.
China warned the United States that it would take “firm countermeasures” in response to U.S. legislation backing anti-government protesters in Hong Kong.
Investors are concerned that the move might delay further a preliminary agreement between the United States and China to put an end to their trade war that has slowed global economic growth, and consequently consumption of oil.
· President Donald Trump traveled to Afghanistan for the first time to visit U.S. troops during the Thanksgiving holiday, where he met with the Afghan president and said Washington had restarted talks with the Taliban.
Reference: Reuters, CNBC
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