· The U.S. dollar rose to a two-week high against a basket of currencies on Friday on rising U.S. yields, while sterling extended a decline in the wake of dovish comments from the head of the Bank of England.
The dollar index, which tracks the greenback versus a basket of six currencies .DXY, rose 0.4 percent, to 90.314, after touching a near two-week high of 90.477.
· U.S. two-year Treasury yields US2YT=RR reached 2.453 percent on Friday, the highest level since September 2008 as the two-year’s spread versus two-year German Bunds DE2YT=RR grew to 302 basis points, the widest in more than three decades.
A U.S. bond sell-off continued for a second day on Friday, pushing the 10-year Treasury yield to its highest level in more than four years and steepening the yield curve after two weeks of flattening.
Benchmark 10-year notes US10YT=RR touched 2.962 percent, surpassing their January 2014 levels. They last fell 13/32 in price to yield 2.9602 percent.
The higher yields seemed to reflect a technical shift in the market, rather than a jump in investor confidence in the U.S. economy or rising inflation, so analysts are regarding the steeper curve as temporary.
· Last Week, Federal Reserve officials signaled further interest rate increases in 2018 based on evidence of steady U.S. growth, while the heads of the ECB and the Bank of England seemed in no rush to push rates higher in the wake of disappointing economic data out of Britain and Europe.
The euro EUR= hit a two-week low of $1.2248, for a weekly drop of 0.39 percent, its steepest weekly fall in two months.
Sterling GBP=D3 shed 0.4 percent to $1.4032, leading to a weekly loss of 1.4 percent, which would be its biggest in 10 weeks.
The greenback JPY= gained 0.2 percent against the yen, at 107.50 yen, after touching a two-month peak of 107.85 yen.
· On Friday, ECB President Mario Draghi told central bankers and ministers at an event in Washington that the 19-nation euro zone has been expanding robustly and needs strong global growth and open trade for the expansion to continue.
But some analysts doubt the ECB would signal further changes in policy next week.
· “The speed of euro zone activity has declined after the very strong activity we had seen in 2017,” said Ugo Lancioni, head of currency management with Neuberger Berman in London. “The ECB may be cautious.”
· U.S. administration officials are preparing for an unprecedented summit between President Donald Trump and North Korean leader Kim Jong Un, but basic details, including where and when it will happen and negotiating tactics, are still being worked out.
· North Korea said on Saturday it would immediately suspend nuclear and missile tests, scrap its nuclear test site and instead pursue economic growth and peace, ahead of planned summits with South Korea and the United States.
· Britain said on Saturday that North Korea’s plan to cease nuclear tests would be a positive step and that it hoped this was a sign of good faith.
· U.S. President Donald Trump said on Sunday the North Korean nuclear crisis was a long way from being resolved, striking a cautious note a day after the North’s pledge to end its nuclear tests raised hopes before planned summits with South Korea and the United States.
U.S. President Donald Trump will not be willing to offer North Korea substantial sanctions relief before Pyongyang has substantially dismantled its nuclear programs, the Wall Street Journal reported on Sunday, citing administration officials.
· The first big showdown at the U.S. Supreme Court over President Donald Trump’s immigration policies is set for Wednesday when the justices hear a challenge to the lawfulness of his travel ban targeting people from several Muslim-majority countries.
· U.S. Treasury Secretary Steven Mnuchin said on Saturday he may travel to China, a move that could ease tensions between the world’s two largest economies, as international policymakers acknowledged Beijing needs to change its trade practices.
· China on Sunday said it welcomed plans by top U.S. officials to visit the country to discuss trade and economic issues, amid tensions between the world’s two largest economies.
· The European Union and Mexico reached an agreement on Saturday on a new free trade deal, a coup for both parties in the face of increased protectionism from the United States under President Donald Trump.
The agreement in principle with Mexico follows a deal struck last year with Japan and comes ahead of talks next week with the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay.
· Foreign ministers from the Group of Seven leading industrialized nations are expected to maintain a tough line on Russia over its involvement in conflicts in Syria and Ukraine, while leaving the door open to cooperation, two sources briefed on the matter said on Sunday.
The foreign ministers’ talks, due to end late on Monday, will help prepare for a G7 leaders’ summit in Canada in early June. The G7 comprises the United States, Britain, Canada, Germany, France, Italy and Japan.
· German Foreign Minister Heiko Maas on Saturday urged Russia to help solve the Syria crisis as he set off for a meeting of foreign ministers from the Group of Seven (G7) major industrialized nations in Toronto.
The Syrian conflict has badly damaged already strained relations between the West and Russia, which backs President Bashar al-Assad.
· Oil prices edged up on Friday, stabilizing after an earlier slide driven by U.S. President Donald Trump’s criticism of OPEC’s role in pushing up global oil prices.
Brent crude oil futures LCOc1 gained 28 cents, or 0.4 percent, to settle at $74.06 per barrel. West Texas Intermediate crude futures CLc2 for delivery in June, the most active U.S. contract, were up 7 cents at $68.40. The May WTI contract, which expired on Friday, CLc1 gained 9 cents, or 0.1 percent, to settle at $68.38.
It was not immediately clear what sparked Trump's OPEC tweet, but Reuters reported earlier this week that Saudi Arabia would like oil prices to rise above $80 a barrel in order to support the stock market debut of the kingdom's oil giant Saudi Aramco.
· Britain and South Korea are in talks to protect an arrangement of tax breaks for Korean buyers of North Sea crude beyond Britain’s upcoming exit from the EU, officials from both countries said, although a breakthrough does not look imminent.
Reference: Reuters
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