· The dollar pulled back from an 11-month peak against a basket of major currencies on Friday as investors took profits after the currency’s earlier rally, while sterling rebounded from a seven-month low after a slightly hawkish tilt from the Bank of England surprised the market.
The dollar index, which tracks the greenback against six other currencies, was effectively flat at 94.81 after touching 95.533 the previous day, its highest level since last July.
The euro rebounded from a fresh 11-month low of $1.1508 it hit overnight after testing technical support in the $1.15 area. It last traded $1.1609, up 0.05 percent on the day.
· Republican leaders in the U.S. House of Representatives on Thursday delayed at least until next week votes on an immigration bill that was painstakingly negotiated over the last several weeks but has failed to attract enough support for passage.
· The U.S. military has been asked to get ready to house up to 20,000 immigrant children, officials said on Thursday, as President Donald Trump’s efforts to roll back a widely condemned policy of separating children from their parents were beset by confusion.
· The International Monetary Fund is likely to revise down its growth forecasts for the euro zone as the area faces higher risks from trade, Britain’s talks to leave the bloc and market jitters over fiscal easing in Italy and other states.
When the fund publishes its new forecasts on the global economy in July, it is likely to slightly revise down its growth estimates for the 19-country euro zone but does not expect “a sharp slowdown,” the fund’s managing director Christine Lagarde told a news conference in Luxembourg on Thursday.
· Trump announced in March he would be putting a 25 percent tariff on steel imports and another of 10 percent on aluminium imports. Despite a temporary exemption, the European Union, and therefore the euro zone, became subject to those tariffs at the start of June.
In retaliation, the European Union is implementing as of Friday new duties against U.S. goods, such as orange juice, sweetcorn, peanut butter and blue jeans.
· The ongoing tensions over international trade are the biggest economic risk to the euro zone, the managing director of the International Monetary Fund said Thursday.
Though the euro area enjoyed an economic expansion "above potential" in 2017, "the momentum is slowing down a bit at the moment, Christine Lagarde, managing director of the IMF told reporters in Luxembourg, adding that it is likely the Fund will be "modestly" lowering its economic forecasts in July.
The Fund doesn't expect the economic slowdown to be "sharp," partly because monetary policy will continue to support growth in the 19-member region. But, according to Lagarde, there's a series of economic risks. The first of them is trade tensions.
"First on the list of risks is clearly the series of trade tensions that has been initiated by the tariff increase on steel and aluminium," Lagarde said, referring to the actions of U.S. President Donald Trump's administration.
· Euro zone finance ministers on Friday extended maturities and deferred interest of a major part of their loans to Greece along with a big cash injection to ensure Athens can stand on its own feet after it exits its bailout in August.
The key element of the debt relief is an extension of maturities and grace periods on 96.9 billion euros of loans granted to Greece under the second bailout by 10 years to smooth out any sharp debt servicing peaks for decades ahead.
Greece will also get a 15 billion euro new loan, which will take the total cash buffer with which it will leave the bailout on Aug 20 to 24.1 billion. This will give it independence form market borrowing for some 22 months, euro zone ministers said in a statement.
· The International Monetary Fund welcomed on Friday a deal on debt relief for Greece reached by Athens’ euro zone creditors saying it will improve debt sustainability in the medium term, but maintained reservations on the long term.
· U.S. protectionism is self-defeating and a “symptom of paranoid delusions” that must not distract China from its path to modernization, Chinese state media said on Friday as Beijing kept up with its war of words with Washington over trade.
· China is currently testing the world's most powerful naval gun and people with direct knowledge of a U.S. intelligence report say it will be ready for war by 2025.
Railguns use electromagnetic energy instead of gunpowder to propel rounds, and China's is capable of striking a target 124 miles away at speeds of up to 1.6 miles per second, according to the report. For perspective, a shot fired from Washington, D.C., could reach Philadelphia in under 90 seconds.
· All eyes are on a gathering of OPEC+ officials in Vienna on Friday. Officials from cartel members and like-minded oil-producing countries will lay out an update to their coordinated output cut scheme. After weeks of back-and-forth sparring, Saudi Arabia and Russia have reportedly reached a preliminary deal with most of their counterparts to boost crude supply by 1 million barrels per day.
Some countries are unable to ramp up capacity to such an extent, so the actual increase may amount to a more modest 600k barrels per day. Iran continues to oppose even this limited, which is presumably designed in large measure to counter a demand-destroying price spike that might follow after its shipments are derailed by new US sanctions. It says a final accord at this meeting is unlikely.
Interestingly, crude oil prices may fall harder if OPEC+ officials fail to reach common ground than if they do. A net increase of 600-800k barrels per day is probably priced in already and the announcement of such a modest boost may even trigger a relief rally. Alternatively, the absence of a deal may unleash a free-for-all, removing a check on swing suppliers like the US and potentially flooding the markets anew.
· CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices are oscillating in a familiar range above support in the 63.96-64.26 area. A break lower confirmed on a daily closing basis initially exposes the April 6 low at 61.84. A break of resistance in the 66.22-67.36 zone is needed to overturn the near-term bearish bias. The 68.64-69.53 region follows thereafter.
· Market focus is largely attuned to a meeting of major oil producers taking place in Vienna, Austria, this week, with a final decision over production policy expected later in the session. Energy ministers have been scrambling to reach a deal on output agreement, with Saudi Arabia warning of shortages but Iran holding out against a deal amid the prospect of lower exports due to looming U.S. sanctions.
· OPEC will seek agreement on Friday to raise oil production despite opposition from Iran, which has threatened to block the move as it faces export-crippling U.S. sanctions.
OPEC’s de facto leader Saudi Arabia and non-OPEC Russia have said a production increase of about 1 million barrels per day (bpd) or around 1 percent of global supply had become a near-consensus proposal for the group and its allies.
· Oil prices rose by more than 1 percent on Friday, lifted by uncertainty over whether OPEC would manage to agree a production increase at a meeting in Vienna later in the day.
Brent crude oil futures LCOc1 were at $74.02 per barrel at 0645 GMT, up 97 cents, or 1.3 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $66.37 a barrel, up 84 cents, or 1.3 percent.
Reference: Reuters, CNBC, DailyFX
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