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• The dollar fell against most currencies on Friday, dropping to its lowest in more than two years against the yen, as President Donald Trump’s proposal to impose hefty tariffs on steel and aluminium imports raised prospects of a trade war that could damage the U.S. economy.
The dollar index, tracking it against a basket of major currencies, fell 0.4 percent to 89.957.
The dollar fell to 105.26 yen, the lowest since November 2016 and was last down 0.5 percent at 105.72 yen. Against the euro and sterling, the yen was up 0.1 percent and 0.5 percent respectively.
Friday’s sell-off came just as the dollar had risen to multi-week highs amid strong data and an upbeat view on the economy from Federal Reserve Chairman Jerome Powell, which reinforced expectations of three or more interest rate hikes this year.
• “Historically, the dollar loses from trade wars, which underscores our structural bearish views, especially as the ramping up of twin deficits will require international funding over the next few years,” said Mark McCormick, head of North American FX strategy at TD Securities in Toronto.
• The euro gave up early gains and dipped in early Monday trade as exit polls in Italian elections pointed to a stronger-than-expected showing for the anti-establishment 5-Star Movement, although it is falling short of an absolute majority.
The euro EUR= dipped to $1.2309, down 0.1 percent after having risen to as high as $1.23655, extending its recovery from seven-week low of$1.21545 touched on Thursday.
• Exit poll shows the Italian election is heading for a hung parliament, CNBC.
Italy’s national election produced no outright winner on Sunday, according to exit polls that pointed to possible political gridlock, with voters backing anti-establishment and far-right parties in record numbers.
A rightist alliance emerged with the biggest bloc of votes, ahead of the anti-establishment 5-Star Movement, the largest single party, polls showed. The ruling center-left coalition came third, hurt by anger over poverty and mass immigration.
Italy’s anti-establishment 5-Star Movement and the anti-immigration League party have done surprisingly well in voting for the powerful upper house Senate at elections on Sunday, according to an updated projection based on early counting.
Full results are not expected for several hours, and Italian exit polls have previously given misleading initial readings.
The 5-Star Movement is likely to be the largest single party by a wide margin, a projection a prominent deputy from the bloc called a“triumph”.
• British Prime Minister Theresa May told U.S. President Donald Trump she had“deep concern” about the expected announcement of U.S. tariffs on aluminum and steel, May’s office said on Sunday following a phone call between the two leaders.
“The Prime Minister raised our deep concern at the President’s forthcoming announcement on steel and aluminum tariffs, noting that multilateral action was the only way to resolve the problem of global overcapacity in all parties’ interests,” a spokeswoman from May’s office said.
• An influential U.S. lawmaker said on Sunday all fairly traded steel and aluminum, especially from Canada and Mexico, should be excluded from President Donald Trump’s proposed tariffs, as he sought to calm tensions at major trade talks in Mexico.
From a hotel in Mexico City, Ann Wilson, a senior executive at the U.S. Motor and Equipment Manufacturers Association (MEMA), is fielding calls from American auto parts makers worried that President Donald Trump’s metal tariffs will force them out of business.
• Trump struck a defiant tone on Friday, saying trade wars were good and easy to win, a day after he said he intended to put duties of 25percent on steel imports and 10 percent on aluminum products.
• North Korea threatened on Saturday to“counter the U.S.” if the United States holds joint military exercises with South Korea, and said it would not beg for talks with Washington.
• China aims to expand its economy by around 6.5 percent this year, the same as in 2017, Premier Li Keqiang said in remarks prepared for delivery at the opening of the annual meeting of parliament on Monday.
The goal was kept unchanged even though the economy grew 6.9 percent last year, exceeding the government's target.
• Oil prices rose on Friday as Wall Street stocks bounced off session lows, but benchmark crude futures posted their first weekly decline in three weeks on fears U.S. plans to impose tariffs on steel and aluminum could squeeze economic growth and jitters about rising U.S. crude production.
Brent futures LCOc1 rose 54 cents, or 0.9 percent, to settle at $64.37 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 gained 26cents, or 0.4 percent, to settle at $61.25.
For the week, Brent was down about 4 percent and WTI down more than 3 percent.
Reference: Reuters, CNBC
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