• The euro fell on Wednesday as weaker confidence in the euro zone overshadowed better-than-expected data on business activity, while concern about Washington’s end-of-week deadline to impose tariffs on Chinese imports crimped trading.
The yuan was the big winner, gaining as much as 0.9 percent as the Chinese currency built on its recovery from an 11-month low after the central bank sought to stem its recent tumble.
Major currencies largely traded within ranges, however, with Independence Day celebrations in the United States discouraging traders from taking big positions, at least until it’s clearer where the escalating U.S.-China trade war is heading and the extent to which Europe will become embroiled.
The euro fell 0.1 percent to $1.1647 EUR= after data showed euro zone business growth accelerated in June, making the European Central Bank more likely to tighten policy. But optimism among purchasing managers was at its lowest since late 2016, the Purchasing Managers Index survey found.
The dollar slipped against a basket of six major currencies .DXY to 94.600, remaining near 11-month highs after three consecutive months of gains.
• IHS Markit’s Final Composite Purchasing Managers’ Index for the euro zone, seen as a good overall indicator of growth, rose to 54.9 in June from May’s 54.1, comfortably above the 50 mark separating growth from contraction.
That beat an earlier flash reading of 54.8, but the latest PMI is lagging much higher numbers from around the turn of the year. The future output index, which tracks business optimism, fell to 63.4 from 63.7 — its lowest since November 2016.
• China will “absolutely not” fire the first shot in a trade war with the United States and will not be the first to levy tariffs, its finance ministry said on Wednesday.
A person with knowledge of the plan earlier told Reuters China’s threatened tariffs on $34 billion of U.S. goods would take effect from the beginning of the day on Friday. Given the 12-hour time difference, that would have put its implementation ahead of Washington’s. Other media carried similar reports.
• China’s finance ministry said on Wednesday it will not fire the first shot on implementation of tariffs in a trade dispute with the United States.
The ministry, in a statement, said it would not implement its tariffs on U.S. goods set to take effect on July 6 before the United States imposes its tariffs on Chinese goods.
• Trade barriers being erected by major economies could jeopardize the global economic recovery and their effects are already starting to show, the World Trade Organization said on Wednesday in a report on trade restrictions among G20 nations.
“This continued escalation poses a serious threat to growth and recovery in all countries, and we are beginning to see this reflected in some forward-looking indicators,” WTO Director General Roberto Azevedo said in a statement.
He did not elaborate, but in May the WTO’s quarterly trade outlook indicator suggested trade would grow slower in the second quarter than in the first.
The WTO report did not name any particular country, but since the start of the year U.S. President Donald Trump has launched a series of tariffs to punish what he sees as unfair trade, by allies and economic rivals alike.
It added that the world trading system was built to resolve such problems but the escalating tensions were a threat to the system itself, and G20 economies needed to use all means at their disposal to de-escalate the situation and promote further trade recovery.
• Britain’s large services industry grew last month at its fastest rate since October, a survey showed on Wednesday, prompting investors to increase bets that the Bank of England will raise interest rates next month.
After a weak first four months of 2018, the IHS Markit/CIPS services Purchasing Managers’ Index (PMI) rose to 55.1 in June, easily beating economists’ average forecasts in a Reuters poll of 54.0, unchanged from May’s reading.
• The United States appears to have shelved an “all or nothing” approach to North Korean denuclearization as U.S. Secretary of State Mike Pompeo prepares to head back to North Korea this week hoping to agree a roadmap for its nuclear disarmament.
Pompeo will spend a day and a half in North Korea on Friday and Saturday on what will be his third trip to the country this year, and his first since an unprecedented summit between President Donald Trump and North Korean leader Kim Jong Un in Singapore on June 12.
• Brent oil rose on Wednesday, driven higher by a threat from an Iranian commander and a drop in U.S. crude inventories for the second week in a row.
The price rose above $78 a barrel after an Iranian Revolutionary Guards commander said he was ready to prevent regional crude exports if Iranian oil sales were banned by the United States.
The most-active Brent LCOc1 futures contract for September delivery settled up 48 cents at $78.24 per barrel. U.S. crude futures CLc1 were up 19 cents at $74.33 a barrel, within sight of Tuesday’s 3-1/2-year high above $75 a barrel. The U.S. market will not have a settlement price due to the U.S. Independence Day holiday.
• Iranian President Hassan Rouhani appeared on Tuesday to threaten to disrupt oil shipments from neighboring states if Washington continued to press all countries to stop buying Iranian oil.
• U.S. President Donald Trump’s pressure on international firms not to buy Iranian oil will drive prices higher and end up hurting his own economy, a senior Iranian oil official said on Wednesday.
• Iran could reduce its co-operation with the U.N. nuclear watchdog, President Hassan Rouhani told the body’s head on Wednesday, after he warned U.S. President Donald Trump of “consequences” of fresh sanctions against Iranian oil sales.
Reference: Reuters
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