· The dollar was steady against its peers on Thursday, having failed to extend overnight gains amid conflicting signals from Washington on a proposal to restrict Chinese investment as the bitter U.S.-China trade row kept financial markets on edge.
The dollar index .DXY against a basket of six major currencies stood steady at 95.266 after rallying 0.65 percent the previous day.
The greenback had advanced after U.S. President Donald Trump said on Wednesday he will use a strengthened national security review process to thwart Chinese acquisitions of sensitive American technologies, a softer approach than imposing China-specific investment restrictions.
There was, however, some confusion about Washington’s intentions - with U.S. shares making an about-turn and dropping - after White House economic adviser Larry Kudlow told Fox Business Network later on Wednesday that Trump’s announced plan did not indicate a softened stance on China.
The dollar was flat at 110.23 yen JPY=. The currency rose to 110.49 the previous day before pulling back slightly following Kudlow's comments on Trump's investment restriction plans.
The euro was a shade higher at $1.1567 EUR= after shedding 0.8 percent overnight. Concerns over political complications in Germany are expected to be a drag on the single currency.
A push below immediate support opens the door for EUR/USD to resume its downtrend. In fact, such an outcome further jeopardizes its ascent in 2017 and the long-term outlook could turn even more bearish. Such a case places the 50% midpoint of the extension as the first target at 1.1400. On the other hand, a climb above immediate resistance exposes the June 14th high at 1.1852.
· China’s currency has slipped markedly in the last week, to the point where it’s trading at December lows against the dollar, and that’s prompting speculation that China would be willing to use a weakened currency to fight U.S. tariffs and trade threats.
But analysts say while the currency has made a clear move lower since trade rhetoric flared, the likelihood of China devaluing its currency to spite President Donald Trump is very low. For now it appears the currency's drop could just be a coincidence.
China has often been accused by the U.S. government of intentionally keeping its currency depressed to cheapen its goods in the world market, making them more attractive than those from countries with stronger currencies. The Trump administration this year stopped short of calling China a ‘currency manipulator,' and China’s currency has actually been fairly steady for most of the year
· President Donald Trump’s corporate tax cuts are probably here to stay but it’s likely a different story for his tariffs, Nobel Prize-winning economist Robert Shiller told CNBC on Monday.
That’s because they are “too crazy,” said Shiller, a professor of economics at Yale University.
“They are generating so much anger around the world. It’s not a sustainable policy,” he said on “Power Lunch"
· Despite public statements softening its stance, the Trump administration could still take a hard line on Chinese investments in U.S. tech companies.
A lot depends on whether Congress moves ahead with a long awaited overhaul of the current government system for reviewing and approving transactions that may pose a threat to national security, including the transfer of sensitive technologies.
The White House on Wednesday backed away from a high profile promise made last month to single out China for a new investment ban.
· China’s commerce ministry said on Thursday it would carefully monitor U.S. policies on inbound investments, stressing that the country opposes using national security as grounds to restrict foreign investments.
· Annual growth in Japanese retail sales slowed in May to its lowest in seven months, adding to worries about weak consumer spending that caused a first-quarter economic contraction.
The 0.6 percent annual increase in retail sales in May was weaker than the median estimate for a 0.9 percent gain, following a revised 1.5 percent increase in April.May’s result marked the slowest growth since a 0.2 percent decline last October.
· China has agreed to lift a ban on imports of British beef that was imposed over a BSE crisis in the 1990s, Chancellor Philip Hammond said on Wednesday.
Hammond is visiting Beijing this week.
The agreement allows official market access negotiations to begin, said a government statement, adding that the process typically takes around three years.
· Mexican presidential candidate Andres Manuel Lopez Obrador’s lead widened to 32 percentage points in a final poll published by El Financiero newspaper on Wednesday ahead of Sunday’s election.
The poll placed ruling party candidate Jose Antonio Meade in second place with 22 percent of the vote.
· Turkish President Tayyip Erdogan and his government alliance partner have agreed not to extend emergency rule when the current three-month period expires in July, the pro-government Sabah newspaper said on Thursday.
The state of emergency has been in place since after an attempted coup in July 2016 and has been extended every three months since then. Erdogan said this month it would be lifted if he won the June 24 elections.
· Growth in China’s manufacturing sector is expected to have cooled only slightly in June after a surprise pickup in May, which along with strong industrial profits last month should help allay concerns of a sharp economic slowdown.
All the same, the country’s massive factory sector could soon be facing significant new challenges as the latest tariffs in an escalating trade dispute between China and the United States are set to take effect on July 6.
· German Chancellor Angela Merkel’s fragile coalition government faces potential collapse as the Christian Social Union (CSU), her Bavarian ally, has threatened to defy her and impose border controls unless their demands to reduce Germany’s immigration burden are met.
· U.S. Defense Secretary Jim Mattis reassured South Korea on Thursday that the United States will maintain its current number of troops on the Korean Peninsula.
The military exercise was cancelled after President Donald Trump's summit with North Korean leader Kim Jong Un.
· U.S. oil prices dropped away from three-and-a-half year highs on Thursday amid high output from Russia, the United States and Saudi Arabia, although unplanned supply disruptions elsewhere and record demand stemmed a bigger decline.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $72.42 a barrel at 0639 GMT, down 34 cents, or 0.5 percent, from their last settlement. WTI hit its highest since November 2014 at $73.06 per barrel in the previous session.
Brent crude futures LCOc1 were at $77.40 per barrel, down 22 cents, or 0.3 percent, from their last close.
Reference: Reuters,CNBC,DailyFX
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