· The dollar traded near a one-week low versus the yen on Tuesday and near the lowest in almost two weeks against the euro, on concern about weak U.S. manufacturing data and signs of new fronts in the U.S. trade war.
The dollar traded at 109.18 yen JPY=EBS on Tuesday in Asia, close to its lowest in a week. It was quoted at $1.1075 versus the euro EUR=EBS after falling 0.56% on Monday, its biggest decline against the single currency since Sept. 17.
Against a basket of six major currencies, the dollar index .DXY stood at 97.905, having fallen on Monday by the most in six weeks.
· As many have pointed out, there’s zero evidence that Brazil or Argentina have been intentionally manipulating their currencies, but reason and logic have no place in the abandoned psychiatric hospital that is Donald Trump’s head.
In addition to costing American companies and consumers, the abrupt imposition of the new tariffs may scare other countries worried about dealing with a capricious reality-TV businessman who seemingly makes major policy decisions based on likes. “It ought to make a whole lot of people nervous,” William Reinsch, of the Center for Strategic and International Studies, told the Washington Post.
U.S. President Donald Trump’s surprise decision to slap metals tariffs on Brazil is a blow to President Jair Bolsonaro’s aim of forging closer ties with Washington and could push Latin America’s No. 1 economy closer to Trump’s top trade foe - China.
Analysts said Trump’s repeated snubs of Bolsonaro could push Brazil back toward the more long-term, consistent and drama-free embrace of China.
· U.S. President Donald Trump said on Monday U.S. legislation backing protesters in Hong Kong did not make trade negotiations with China easier, but added he believes Beijing still wants a deal with the United States.
The law “doesn’t make it better, but we’ll see what happens,” Trump said, talking to reporters. He gave no indication when the deal would be finalized, but two other U.S. officials said a deal could still happen this year depending on China’s actions.
· The United States and China are likely to ink a “phase one” trade deal because the presidents of both countries have incentives to do so, a Yale University professor said Tuesday.
“There’s a better than 50-50 chance we will get a ‘phase one, skinny’ deal, largely because both presidents, Trump and Xi, need this for domestic political reasons,” Stephen Roach, a senior lecturer at Yale University’s Jackson Institute for Global Affairs, told CNBC’s “Squawk Box.”
Clinching the trade agreement with Beijing could help U.S. President Donald Trump “deflect attention away” from the political problems he’s facing on the home front, Roach said. Trump, for his part, is facing an impeachment inquiry in Washington.
Yale’s Roach said while it’s hard to predict the next “twist and turn” on the tariff front, he thinks Trump may be “prepared at this point to stand down a bit,” as the president did in October when he suspended a tariff hike on $250 billion of Chinese imports.
“I think he’ll do the same thing in 13-14 days with the mid-December deadline as well. He’ll kick the can down the road,” Roach said.
· Hong Kong leader Carrie Lam said on Tuesday U.S. legislation supporting protesters may damage business confidence in the financial hub, as she announced a fourth round of relief measures to boost the city’s battered economy.
“The impact currently is on confidence ... because corporates will be worried about the actions the U.S. government may take in the future after they review this legislation,” Lam said.
· China might ban all U.S. diplomatic passport-holders from entering the country’s western Xinjiang autonomous region, Global Times Editor-in-Chief Hu Xijin said on Tuesday.
Hu said in a tweet that China is also considering visa restrictions against U.S. officials and lawmakers with “odious performance” on the Xinjiang issue, in retaliation to legislation being prepared by the U.S. Congress.
U.N. experts and activists say at least 1 million Uighurs, and members of other largely Muslim minority groups, have been detained in camps in the remote Xinjiang region. Top U.S. officials including Secretary of State Mike Pompeo have criticized China publicly on the situation there.
· Chinese state media said the government will soon publish a list of “unreliable entities” that could lead to sanctions against US companies, signaling that trade talks between the two nations are increasingly under threat from disputes over human rights in Hong Kong and Xinjiang.
The Communist Party-backed Global Times said in a tweet early Tuesday that the list was being sped up in response to a bill sponsored by Republican Senator Marco Rubio requiring measures against Chinese officials involved in alleged abuses of Uighur Muslims in the far west region of Xinjiang. Beijing has threatened to publish such a list of companies since May, after the US placed restrictions on Huawei Technologies Co.
A response from China on the Xinjiang issue that hits US companies would add another obstacle as the two countries struggle to finalise a phase-one deal to de-escalate the trade war. On Monday, US President Donald Trump said that legislation signed last week censuring China over the protests in Hong Kong had already complicated the talks.
Global Times Editor-in-Chief Hu Xijin went further on Twitter, saying that US officials may face visa restrictions and US passport holders could be banned from entering the province. China stands accused of incarcerating as many as a million Uighurs as part of an anti-terrorism campaign, actions it describes as voluntary re-education.
China hasn’t specified which companies would be affected by the blacklist, though courier firm FedEx Corp. has been under particular scrutiny this year. A re-escalation of trade tensions also places more focus on a Dec. 15 deadline for Trump to add yet more tariffs on Chinese imports.
The US House of Representatives is expected to vote Tuesday on the Xinjiang bill, which was passed by the Senate in September. The vote comes shortly after Trump signed into law a bill that supports pro-democracy protesters in Hong Kong by placing the city’s special trading status under annual review and threatening sanctions on officials who undermine its semi-autonomy from Beijing.
That legislation, along with a bill that bans the export of crowd control devices to Hong Kong police, led China to threaten sanctions on some human rights organizations and halt US naval visits to the city.
· Economic growth in India has slowed down significantly this year — but the third-largest economy in Asia should stage a rebound in 2020 as global conditions are set to improve, according to Goldman Sachs.
That said, the extent of the recovery will likely be modest instead of returning India to the growth rates seen a few years back, said Jan Hatzius, the investment bank’s chief economist and head of global economics and markets research.
India on Friday said its economy grew by 4.5% in the three months to September from the same period a year ago — the slowest growth rate in six years. Goldman Sachs, in a report last week, projected India’s growth to fall to 5.1% this year from roughly 7% annually in 2017 and 2018.
The bank forecast the country’s growth to pick up to 6.4% next year, according to the report.
· Hong Kong’s tourist arrivals and retail sales figures are unlikely to be any better in November after their dismal showing in October, an economist said on Tuesday.
“It’s very hard to imagine that the retail sales numbers and tourist arrival numbers will be any better in November given how much of a step-up in protest and violence that happened during that time,” said Martin Rasmussen, China economist at Capital Economics.
In October, retail sales fell 24.3% from a year ago, according to preliminary Hong Kong government data. The city’s government said that slump is the worst on record.
Tourist arrivals slumped 43.7% in October from year ago to 3.31 million, according to the Hong Kong Tourism Board. That’s a sharper drop than the 34.2% decline in September. Mainland Chinese visitors fell 45.9% in October from a year ago.
· Japan is preparing an economic stimulus package worth $120 billion to support fragile growth, two government officials with direct knowledge of the matter said on Tuesday, and complicating government efforts to fix public finances.
· The latest U.S. tariff threats on French products are “unacceptable” and the European Union is ready to issue a riposte, French finance minister Bruno Le Maire said on Tuesday.
· Oil prices gained on Tuesday, as hopes rose for OPEC and its allies to agree deeper output cuts when they meet this week, although gains were limited, amid some analysts’ scepticism over the achievement of further reductions.
Brent futures LCOv1 rose 17 cents, or 0.3%, to $61.09 a barrel by 0516 GMT, after having gained 0.7% on Monday.
U.S. West Texas Intermediate crude CLc1 was up 25 cents, or 0.5%, at $56.21 a barrel. The contract rose 1.4% on Monday.
Reference: Reuters, CNBC, The Washington Post
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