• MTS Economic News_20180607

    7 Jun 2018 | Economic News


·         The euro climbed to a two-week high on Thursday as investors raised their bets that the European Central Bank will next week signal a winding down of its vast bond-buying program by the end of this year.

The comments drove the euro to a two-week high of $1.1828 EUR=, up half a percent on the day.

The dollar index .DXY slipped 0.4 percent to its weakest since May 22, helping several currencies including sterling GBP= and the yen JPY= claw back some of their recent losses versus the greenback. 

The dollar hit a two-week high of 110.27 yen in late U.S. trade on Wednesday before giving up gains in Asia. The U.S. currency fell 0.2 percent to 109.98 in early European trading.

·         The U.S. dollar’s dominance is forecast to fade soon, with any sudden change in expectations for the policies of other central banks posing the biggest risk, a Reuters poll of currency strategists showed.

Nearly 60 percent, or 35 of 60 analysts, who answered an additional question in a poll taken this week said the dollar’s recent resurgence would last about three months. Ten expect it to end within a month.

·         Sterling is likely to gain, and by the time Britain leaves the European Union next March it is expected to have recouped much of the losses since the June 2016decision to leave the bloc, according to a Reuters poll.

The currency is down around 10 percent since Britons voted to leave the EU, trading at $1.34 on Wednesday, but a lot of those losses will be wiped out on expectations for rate hikes and a good divorce deal with the EU.

Sterling’s collapse was predicted in numerous Reuters polls before the Brexit referendum.

In a month’s time, sterling will be at $1.33, in six months at $1.35 and in a year it will have jumped to $1.41, the June 1-6 poll of over 50 foreign exchange strategists predicted.

·         Top White House economic advisor Larry Kudlow contended Wednesday that President Donald Trump should not be held responsible for mounting trade conflicts with American allies, as the president gets set to face world leaders angered by tariffs imposed by the U.S.

"Don't blame Trump. Blame the nations that have broken away" from fair trade practices, he told reporters. The global trade system "is broken and President Trump is trying to fix it. And that's the key point," Kudlow added.

·         China Commerce Ministry Spokesman Feng: China doesn't want to escalate trade tensions with US, detail in trade talks with US are to be confirmed

·         The Federal Reserve will likely raise its target interest rate to above the rate of inflation for the first time in a decade next week, igniting a new debate: when to stop.

The Fed has been gradually hiking rates since late 2015 with little sign of tighter conditions hampering economic recovery. The expected June increase will raise the stakes as the Fed seeks to sustain the second-longest U.S. expansion on record while continuing to edge rates higher.

With inflation still tame, policymakers are aiming for a “neutral” rate that neither slows nor speeds economic growth. But estimates of neutral are imprecise, and as interest rates top inflation and enter positive “real” territory, analysts feel the Fed is at higher risk of going too far and actually crimping the recovery.

·         Singapore airspace will be restricted during the planned U.S.-N.Korea summit next week, according to a notice to airmen posted by aviation authorities on Wednesday, which is likely to result in delays at one of Asia’s busiest airports.

·         German factory orders unexpectedly dropped for a fourth month in April, raising the prospect that an economic slowdown at the start of the year may be worsening.


Orders, adjusted for seasonal swings and inflation, slid 2.5 percent, the Economy Ministry said Thursday, compared with forecasts for an increase of 0.8 percent. From a year earlier, orders slipped 0.1 percent, the first annual decline since 2016.

The euro briefly pared gains after the report, and was trading 0.3 percent higher at $1.1807 at 8:58 a.m. Frankfurt time.

·         There is little Congress can do to stop President Donald Trump if he wants to relax penalties on ZTE Corp (000063.SZ), despite strong bipartisan opposition to easing restrictions on China’s No. telecommunications equipment maker.

·         CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices continue to hover at trend support set from June 2017. Breaking below its outer layer – now at 64.98 – exposes the April 6 low 61.84. Alternatively, a move back above resistance in the 66.22-67.36 area sees the next upside barrier in the 68.64-69.53 congestion region.


·         Oil prices on Thursday rose on the back of plunging exports by OPEC-member Venezuela, recovering some ground lost in the previous session, although another surge in U.S. production still weighed on markets, traders said.

Brent crude futures LCOc1 were up 51 cents, or 0.7 percent, to $75.87 a barrel at 0710 GMT.

U.S. West Texas Intermediate (WTI) crude CLcwas up 30 cents, or 0.5 percent, at $65.03 a barrel. It ended the previous session 1.2 percent lower at $64.73 a barrel.

 

Reference: Reuters,DailyFX,Bloomberg

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