· The dollar and yen rose on Tuesday as traders piled into perceived less risky currencies after U.S. President Donald Trump threatened to slap more tariffs on China, fanning a trade dispute between the world’s two biggest economies.
Fears of a trade war that could harm global growth spurred sales of the Chinese yuan, which fell to a five-month trough in the offshore market, as well as commodity-linked and emerging market currencies.
Worries about a growing U.S.-China trade spat also sparked a selloff in stock markets around the world. U.S. equity prices eventually pared their initial drop, which reduced the yen and greenback’s earlier safe-haven gains.
“We are seeing the dollar and yen outperforming most of their peers especially those riskier, high-yielding currencies and those currencies more affected by disruptions in global trade,” said Omer Esiner, chief market strategist with Commonwealth Foreign Exchange in Washington.
The index that tracks the greenback against the euro, yen, sterling and three other currencies .DXY reached $95.266 today, its highest since July 2017.
The yen climbed 0.5 percent at 109.97 yen per dollar JPY=, while the euro EUR= slumped to a two-week low of $1.1528 after European Central Bank President Mario Draghi called for a patient approach to European monetary policy at a forum in Portugal.
· Mario Draghi reinforced his dovish message on the European Central Bank’s retreat from ultra-loose monetary policy, saying interest rates would only rise at a slow pace from September next year.
· U.S. homebuilding surged to near an 11-year high in May amid an acceleration in both single-family and multi-family home construction, but a second straight monthly drop in permits suggested housing market activity would remain moderate.
Housing starts vaulted 5.0 percent to a seasonally adjusted annual rate of 1.350 million units last month, the Commerce Department said on Tuesday. That was the highest level since July 2007. Starts in the Midwest jumped62.2 percent to their highest level since September 2006, offsetting declines in the Northeast, South and Midwest regions.
Building permits fell 4.6 percent to a rate of 1.301 million units, the lowest level since September 2017.
· U.S. President Donald Trump’s threat to escalate a trade conflict with China is likely a negotiating tactic and not a “suicide pact,” the chief executive of Goldman Sachs & Co said on Tuesday, criticizing the White House strategy as a risky tit-for-tat.
· New York Governor Andrew Cuomo, a political opponent of U.S. President Donald Trump, said on Tuesday that the state would sue the Trump administration for separating children of immigrants from their parents when apprehended illegally crossing the U.S. border.
The separations and detention of children at the southern U.S. border with Mexico have caused an uproar in the United States and condemnation abroad, fueled by videos of children in cages and audiotape of children wailing for their parents that has been broadcast on cable networks and posted on social media.
· Congressional Republicans scrambled on Tuesday to craft legislation that would quell an outcry over the Trump administration’s separation of immigrant parents and children at the U.S.-Mexico border, with an opinion poll showing most Americans oppose the policy.
The family separations and detentions of children, highlighted by videos of youngsters in cages and an audiotape of wailing children, have sparked anger at home from groups ranging from clergy to influential business leaders, as well as condemnation abroad.
· President Donald Trump arrived at Capitol Hill for a Tuesday evening meeting with House of Representatives Republicans to discuss their immigration legislation. He is focused on winning congressional funding for a wall he has long wanted to build along America’s southern border with Mexico, a plan resisted by Democrats.
Over 2,300 children were separated from their parents at the U.S.-Mexico border between May 5 and June 9 under the Trump administration’s “zero tolerance” policy, U.S. Customs and Border Protection said on Tuesday, and immigration advocates and legal experts say there is no clear system in place to reunite them.
The policy directs border officials to refer for prosecution all immigrants apprehended while crossing the U.S.-Mexico border illegally.
Parents who are no longer detained “are entitled to get their kids back through a documented process,” U.S. Department of Homeland Security Secretary Kirstjen Nielsen said.
· The United States withdrew from a “hypocritical and self-serving” United Nations Human Rights Council on Tuesday over what it called chronic bias against Israel and a lack of reform, a move activists warned would make advancing human rights globally even more difficult.
· Meeting Kim on his third trip to China this year, and just a week after Kim met Trump in Singapore on June 12, Xi said China was willing to keep playing a positive role to promote the peace process on the Korean peninsula.
· North Korea’s Kim Jong Un and Chinese President Xi Jinping came to an understanding on issues that were discussed at a summit between the two leaders, including denuclearisation of the Korean peninsula, the North’s state media said on Wednesday.
The North Korean leader also promised during a meeting with Xi in Beijing to cooperate with Chinese officials to secure “true peace” in the process of “opening a new future” on the Korean peninsula, it said.
· Japanese manufacturers’ confidence improved for a second straight month in June but the service sector’s mood slumped from May’s record high level, a Reuters poll found, suggesting some fragility in the outlook after a first-quarter contraction.
· Iran’s nuclear chief said on Tuesday that Europe’s proposals to salvage the 2015 nuclear deal after the U.S. withdrawal from the pact were not satisfying for Tehran, warning that all sides would lose if Iran is sidelined by the West, the IRNA state news agency said.
· Oil fell on Tuesday ahead of a possible increase in OPEC crude supply, and as an escalating trade dispute between the United States and China unleashed sharp sell-offs in many global markets.
Brent crude futures LCOc1 slipped 26 cents to settle at $75.08 a barrel, while U.S. West Texas Intermediate crude futures CLc1 fell 78 cents, or 1.2 percent, to settle at $65.07 a barrel.
Reference: Reuters, Financial Times
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