• The dollar rose versus the safe haven yen on Friday as hopes of a breakthrough in the North Korean nuclear standoff rose after U.S. President Donald Trump showed willingness to accept an invitation to meet North Korean leader Kim Jong Un by May.
Against the yen, the dollar rose 0.4 percent to 106.66 yen, inching away from a low of 105.24 yen on March 2, the greenback’s weakest level since November 2016.
The euro held steady at $1.2310, after falling 0.8 percent on Thursday.
The yen showed little reaction after the Bank of Japan kept its monetary policy steady on Friday, as widely expected.
Later on Friday, market participants will turn their attention to U.S. February jobs data.
• Donald Trump pushed forward with plans to impose tariffs on steel and aluminium imports on Thursday, arguing the levies were necessary for national security and to stop the “assault on our country”.
Flanked by steel and aluminium workers and key staff, Trump said he had to act to stop the “decimation of entire communities” and insisted there would be a very fair process as the administration used the next 15 days to negotiate exemptions with allies. Canada and Mexico will be exempted.
• U.S. President Donald Trump said he was prepared to meet North Korean leader Kim Jong Un for the first U.S.-North Korea summit, marking a potentially dramatic breakthrough in nuclear tensions with Pyongyang.
Kim has “committed to denuclearization” and to suspending nuclear and missile tests, South Korea’s National Security Office head Chung Eui-yong told reporters at the White House on Thursday after briefing Trump on a meeting South Korean officials held with Kim earlier this week.
“A meeting is being planned,” Trump posted on Twitter after speaking to Chung, who said Trump expressed a willingness to sit down with Kim in what would be his biggest foreign policy gamble since taking office in January 2017.
• Analysts at Nomura offered a preview of the nonfarm payrolls report in a preview.
Key Quotes: "We expect the February employment report to show that labor markets continued to strengthen, putting additional pressure on the FOMC to stay the course with the current hiking cycle ahead of the 20-21 March meeting.
U.S. job growth likely rose at a brisk clip in February and probably pushed down the unemployment rate to a more than 17-year low of 4.0 percent, but wage gains are expected to have slowed after three straight months of strong increases.
The closely watched employment report from the Labor Department on Friday is expected to underscore the economy’s strength and bolster expectations that the Federal Reserve will raise its interest rate forecasts for 2018. U.S. financial markets have almost priced in an interest rate increase at the Fed’s March 20-21 policy meeting. The Fed is currently anticipating three rate hikes this year.
“A stronger jobs report with another healthy crop of wage gains increases chances that the Fed may add a fourth rate hike before year’s end,” said Beth Ann Bovino, U.S. chief economist at S&P Global Ratings in New York.
• Yesterday we saw the release of the ADP Non-Farm Employment Change. This is a measure of payrolls in the private sector and last month it rose by 235,000 – comfortably above the 199,000-consensus expectation. This marks the third consecutive month in which the ADP number has beaten expectations. But unfortunately, the ADP has proved to be a poor predictor for Non-Farm Payrolls (NFP).
For a start, the NFP is far more volatile than the ADP and frequently shows large month-on-month swings which are generally ironed out in the ADP. Additionally, the ADP has failed recently even when it comes to predicting the overall direction of travel in NFPs. There was a time when a particularly strong (or weak) ADP was later reflected in payrolls – this is no longer the case.
The consensus expectation for tomorrow’s Non-Farms is an increase of 200,000 – unchanged from last month’s update. But, in the absence of a substantial miss to either the upside or downside, this will be of lesser importance than Average Hourly Earnings. It was last month’s +2.9% year-on-year reading (way above the 2.6% expected) which triggered inflation fears.
This in turn catalysed a jump in stock market volatility, a surge in bond yields and the plunge in equities. Another strong wage growth number will add weight to the argument that the Fed is in danger of falling behind the curve when it comes to tightening monetary policy, particularly given the low rate of US unemployment which is expected to drop to 4.0% - its lowest level in over 17 years. Consequently, this will only increase the probability that the Fed will opt for four 25 basis-point rate hikes this year, rather than the three predicted by the FOMC back in December.
Conversely, a moderation in wage growth will give stock market bulls an excuse to push US indices higher and retest resistance hit back in mid-February.
• The Bank of Japan (BOJ) kept monetary settings unchanged on Friday and stuck to its upbeat view on the economy, underscoring its conviction that its massive stimulus programme is helping drive up inflation towards its elusive target.
In a widely expected move, the BOJ maintained its short-term interest rate target at minus 0.1 percent and a pledge to guide 10-year government bond yields around zero percent.
• China has moved away from its old growth model which was heavily reliant on investment and will rely less on stimulus to boost the economy in future, People's Bank of China governor Zhou Xiaochuan said on Friday.
Zhou's comments echoed those of other top officials at China's parliament this week which suggested that Beijing will be more cautious about spending this year while it focuses on reducing the risks from a rapid build-up in debt.
But analysts believe Beijing will continue to keep the system well supplied with cash to avoid the risk of a sharp slowdown in economic growth, even as they continue to tighten the screws on financial regulations.
• China's February consumer inflation accelerated at its fastest year-on-year pace since November 2013, statistics bureau data showed on Friday.
However, this was largely due to higher food prices as China celebrated the long Lunar New Year holiday, official data showed on Friday.
The consumer price index (CPI) quickened to 2.9 percent in February, beating economists' forecasts of a 2.5 percent gain, and picking up from a 1.5 percent growth in January, according to data from the National Bureau of Statistics (NBS).
• Major Asian nations reacted sharply on Friday to U.S. President Donald Trump’s decision to impose tariffs on steel and aluminium imports, warning of damage to relations amid industry calls for retaliation.
Japan said the move would have a “big impact” on the countries’ close bilateral ties, while China said it was “resolutely opposed” to the decision and South Korea said it may file a complaint to the World Trade Organization.
The European Union, Brazil and Argentina said overnight they should not be targeted or would seek exemptions, and both Japan and South Korea said they would ask to be made exceptions also.
• European Trade Commissioner Cecilia Malmstrom said on Thursday that the European Union was a close ally of the United States and should be exempt from impending U.S. metals tariffs.
• Crude oil futures rose on Friday as Asian stock markets gained on news that North Korean leader Kim Jong Un will meet with U.S. President Donald Trump.
Brent crude futures were at $63.79 per barrel at 0625 GMT, up 18 cents, or 0.3 percent, from their previous close.
U.S. West Texas Intermediate (WTI) crude futures were at $60.25 a barrel, up 13 cents, or 0.23 percent.
Reference: Reuters,CNBC,FXStreet
Thai
Eng