· The dollar was little changed against a basket of major currencies on Friday after conflicting U.S. economic data, leaving it on course for its largest weekly rise in 2017 amid a rise in expectations for inflation and U.S. interest rate hikes.
The dollar index, the trade-weighted basket of the greenback against its rivals, was flat at 93.02. It rose 0.9percent for the week, its best weekly performance since September, and was up 0.35 percent for the month.
The euro rose 0.35 percent to $1.1824, having earlier hit a three-day high against the dollar. The dollar was 0.1percent higher against the Japanese yen at 112.43 yen.
· Philadelphia Federal Reserve Bank President Patrick Harker said Friday he still has "penciled in" an interest rate hike in December, and three more rate hikes next year, despite weak inflation.
"Labor markets feel really tight," Harker said at a conference in Philadelphia on Fintech, adding that it was appropriate for the Fed to take a pause for now in raising rates as it begins to shrink its $4.5 trillion balance sheet. Low inflation is a concern, especially since the Fed may be under-estimating productivity, which means it may also be over-estimating inflation.
· U.S. President Donald Trump is ramping up his search for a new chief for the U.S. central bank, meeting with former Federal Reserve Governor Kevin Warsh and three others and promising a decision next month.
Trump has had discussions with Cohn about the job, and has also met with Yellen, another person said.
Trump has previously suggested he may reappoint Fed Chair Janet Yellen to the post. Jerome Powell, one of the current governors on the Fed’s board, also met with Trump earlier this week about the Fed job, the Wall Street Journal reported on Friday. Trump on Friday did not provide details on his meetings.
A new Fed chair would take the helm as the central bank eases well away from crisis-era policies in response to a strengthening economy and falling unemployment, though inflation still lingers below the Fed’s 2-percent goal.
· Treasury yields spurted higher on news of the Trump meetings; Warsh is viewed as more of a hawk than Yellen.
· The New York Federal Reserve on Friday trimmed its estimate of U.S. gross domestic product growth for the third quarter and fourth quarter based on soft readings on new home sales and consumer spending in August.
The regional central bank’s “Nowcast” model calculated the economy was expanding at an annualized pace of 1.46 percent in the third quarter, slower than 1.56 percent last week. Its GDP estimate for the fourth quarter was lowered to 1.95 percent from 2.01 percent a week earlier.
· President Donald Trump said on Friday that U.S. economic growth in the third quarter would likely be reduced by hurricanes that recently struck the nation’s southwest, southeast and U.S. territories in the Caribbean.
· The wealthiest Americans would benefit the most from President Donald Trump’s proposed tax cuts while many upper middle-income people would face higher taxes, independent experts said on Friday in the first detailed analysis of the plan.
A report from the non-profit Washington-based Tax Policy Center found that in 2018, about 12 percent of taxpayers would face a tax increase of roughly $1,800 on average.
That includes more than a third of taxpayers making between about $150,000 and $300,000, mainly because most itemized deductions would be repealed including for state and local taxes, it said.
Its analysis showed that the Republican tax proposal would fuel the growing federal deficit, providing $5.99 trillion in tax cuts while reducing federal revenues by a net $2.4 trillion in the next 10 years.
· U.S. Treasury Secretary Steven Mnuchin on Sunday said one of the top goals of the Trump administration’s tax plan is to help the middle class, but he could not guarantee that every middle-class family would receive a tax cut.
· Donald Trump will travel to Asia in November for the first time since becoming president, stopping in Japan, South Korea, China, Vietnam and the Philippines on a trip expected to be dominated by the North Korea nuclear threat.
Joined by his wife Melania, Trump will travel Nov. 3-14. His visit will include attending two major summits, the Asia-Pacific Economic Cooperation forum in Vietnam and the Association of Southeast Asian Nations conclave in the Philippines.
· Growth across Britain’s private sector cooled slightly in the three months to September, an industry survey showed on Sunday, although companies were mostly upbeat about their prospects for the next three months.
The Confederation of British Industry’s monthly indicator of output for manufacturers, retailers and services companies slipped to +11, down from +14 for the three months to August.
· China’s central bank on Saturday said it will maintain prudent and neutral monetary policy and use multiple monetary policy tools to keep liquidity basically stable.
The People’s Bank of China will continue with interest rate and exchange rate reform while keeping the yuan basically stable, the bank said in comments on its website following a quarterly meeting of its monetary policy committee.
· China’s manufacturing activity grew at the fastest pace since 2012 in September as factories cranked up output to take advantage of strong demand and high prices, easing worries of a slowdown before a key political meeting next month.
Production, total new orders and output prices all improved to the highest level in at least a year, while a pick-up in a reading for the construction sector indicated a building boom is undiminished.
The official Purchasing Managers’ Index (PMI) released on Saturday rose to 52.4 in September, from 51.7 in August and well above the 50-point mark that separates growth from contraction on a monthly basis.
· South Korea’s exports to major trading partners including the United States, China and EU all posted double-digit growth in September from a year earlier, government data showed on Sunday.
Shipments to the United States jumped 28.9 percent in September from a year earlier, while those to China and the EU rose 23.4 percent and 23 percent respectively, a statement from the nation’s trade ministry showed.
· Several North Korean missiles were recently spotted moved from a rocket facility in the capital Pyongyang, South Korea’s Korean Broadcasting System (KBS) reported late Friday amid speculation that the North was preparing to take more provocative actions.
The report cited an unnamed intelligence source saying South Korean and U.S. intelligence officials detected missiles being transported away from North Korea’s Missile Research and Development Facility at Sanum-dong in the northern part of Pyongyang.
· North Korea has shown no interest in pursuing talks on its nuclear and missile programs, the U.S. State Department said on Saturday after Secretary of State Rex Tillerson acknowledged the United States was communicating directly with Pyongyang.
· Oil prices closed up on Friday after a rally in prices on geopolitical instability in Iraqi Kurdistan helped Brent make its strongest third-quarter price performance since 2004.
- Global benchmark Brent crude LCOc1 closed up 13 cents or 0.2 percent to $57.54 a barrel, notching up a third-quarter gain of around 20 percent. On the week, Brent was up 1.2 percent.
The contract reached its highest in more than two years earlier in the week, resulting in a fifth consecutive weekly gain. This was Brent’s longest weekly bull run since June 2016.
- U.S. crude CLc1 closed up 11 cents to settle at $51.67 a barrel, its strongest third quarter in 10 years and longest streak of weekly gains since January. U.S. crude was up around 2 percent on the week.
· Iraq’s Kurds endorsed secession by nine to one in a referendum on Monday that has angered Turkey, the central government in Baghdad and other powers, which fear the vote could lead to renewed conflict in the oil-rich region.
Turkish President Tayyip Erdogan called the vote illegitimate and has threatened to break with past practice and deal only with the Baghdad government over oil exports from Iraq.
Reference: Reuters, CNBC, Bloomberg
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