· The dollar buckled against the yen on Friday as tensions simmered on the Korean peninsula, though the sharp divergence between U.S. and Japanese monetary policy kept the greenback on track for a winning week against the yen.
The dollar dropped as much as 0.8 percent to 111.65 yen in Asian trade, before recovering to trade down around 0.4 percent at 112 yen as traders arrived at their desks in New York.
The dollar index, which tracks the U.S. unit against a basket of six major rivals, fell 0.3 percent to 92.024, but it was still slightly higher on the week and was well above its more than 2-1/2 year trough of 91.011 marked on Sept. 8.
· The euro slipped in early Asian trading on Monday after Germany’s election showed surging support for a far-right party that left Chancellor Angela Merkel scrambling to form a governing coalition.
The euro EUR= was trading down 0.3 percent at $1.1922 and could test support around $1.1860 as liquidity picked up through the session.
· Merkel did win a fourth term in office on Sunday but will have to build an uneasy coalition to form a government after her conservatives haemorrhaged support in the face of a surge by the anti-immigration Alternative for Germany (AfD).
· Political uncertainty also took a toll on the New Zealand dollar after no single party won a majority in an election over the weekend.
The ruling National Party won the largest number votes in the election, but neither of the major parties won enough seats to gain a majority in parliament, forcing a round of coalition building that could last days or weeks
· Dallas Federal Reserve Bank President Robert Kaplan said on Friday he remains “open-minded” on a December rate increase but remains concerned current weak inflation may be the result of hard-to-counter structural trends.
· The top Republican tax law writer in the U.S. House of Representatives unveiled new tax legislation on Friday that he said would help people cope with hurricane devastation in Texas, Florida, the U.S. Virgin Islands, Puerto Rico and other areas.
· A proposal by U.S. Republicans to repeal and replace the Obamacare health insurance program suffered new setbacks on Sunday, when two pivotal senators from the party dug in with criticisms of the bill that President Donald Trump is pushing for quick passage.
Senators John McCain and Rand Paul already have expressed opposition.
· North Korea said on Saturday targeting the U.S. mainland with its rockets was inevitable after “Mr. Evil President” Donald Trump called Pyongyang’s leader “rocket man”, further escalating rhetoric over the North’s nuclear weapons and missile programs.
· China said on Saturday it will ban exports of some petroleum products to North Korea, as well as imports of textiles from the isolated North, to comply with a United Nations Security Council resolution.
The Ministry of Commerce said in a statement on its website that China would limit exports of refined petroleum products from Oct. 1, and ban exports of condensates and liquefied natural gas immediately.
Imports of textiles from North Korea would also be banned immediately, the statement said.
· Iran said on Saturday it had successfully tested a new ballistic missile with a range of 2,000 km (1,200 miles) and would keep developing its arsenal despite U.S. pressure to stop.
The United States has imposed unilateral sanctions on Iran, saying its missile tests violate a U.N. resolution, which calls on Tehran not to undertake activities related to missiles capable of delivering nuclear weapons. Iran says it has no such plans.
· President Donald Trump on Sunday slapped new travel restrictions on citizens from North Korea, Venezuela and Chad, expanding the list of countries covered by his original travel bans that have been derided by critics and challenged in court.
“Making America Safe is my number one priority. We will not admit those into our country we cannot safely vet,” Trump said in a tweet shortly after the proclamation was released.
· Ratings agency Moody’s downgraded Britain’s credit rating on Friday, saying the government’s plans to bring down its heavy debt load had been knocked off course and Brexit would weigh on the economy.
A few hours after Prime Minister Theresa May set out plans for new ties with the European Union, Moody’s cut the rating by a further notch to Aa2, underscoring the economic risks that leaving the bloc poses for the world’s fifth-biggest economy.
· Italy on Saturday raised its forecasts for economic growth this year and next and said it would cut the budget deficit by less than previously promised.
The brighter outlook may help the ruling Democratic Party ahead of national elections early next year if voters notice an improvement in living standards, though Italian growth continues to lag most of its euro zone partners.
Gross domestic product (GDP) will rise by 1.5 percent in 2017, the Treasury said, raising its previous projection of 1.1 percent made in April to reflect better than expected data in the first two quarters and buoyant business sentiment.
Next year, growth is expected to be 1.5 percent, according to the Treasury’s Economic and Financial Document (DEF), up from the previous forecast of 1.0 percent.
· Japanese Prime Minister Shinzo Abe plans to compile a new economic stimulus package of around 2 trillion yen ($17.8 billion) by the end of this year, the Yomiuri newspaper reported on Monday.
The package will mainly consist of increased spending on child care and education, and cover a period of three years from the fiscal year beginning in April 2018, Yomiuri said.
Abe is expected to announce the plan at a news conference later on Monday, where local media report he will also announce a plan to dissolve parliament for a general election to be held on Oct. 22.
· Japanese manufacturing activity expanded in September at the fastest pace in four months as domestic and export orders picked up, a preliminary private survey showed on Monday in a sign of strengthening demand.
The Markit/Nikkei Japan Manufacturing Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 52.6 in September from a final 52.2 in August.
· Oil prices ended nearly 1 percent higher on Friday, close to their highest levels in months, as major producers meeting in Vienna said they may wait until January before deciding whether to extend output curbs beyond the first quarter.
Other ministers said a decision on extending cuts could be taken in November when OPEC holds its next formal meeting.
· Brent crude rose 43 cents, or 0.8 percent, to settle at $56.86, a penny shy of the session high which was also the highest since March. U.S. West Texas Intermediate (WTI) crude settled at $50.66 a barrel, up 11 cents or 0.2 percent, within a few cents of its May peak.
For the week, Brent posted a gain of 2.2 percent, while WTI was up 1.5 percent.
Reference: Reuters
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