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• The dollar dipped against a basket of currencies on Friday, fading from a two-week peak which was tied to news of a record Chinese trade surplus that may fuel U.S.-China trade tensions and that briefly spurred safe-haven bids for the greenback.

An index that tracks the dollar against the yen, euro and four other currencies was down 0.07 percent to 94.740 after touching 95.241, which was the highest since June 29.

The yen recovered from a six-month trough against the greenback after hitting a six-month low at 112.79 yen before recovering to 112.30 yen, up 0.2 percent on the day.

The euro fell to a nine-day low at $1.1610 before ending flat at $1.1680.

The yuan fell half a percent in offshore markets to as low as 6.7250, near an 11-month trough of 6.7326 on July 3.

Despite the greenback’s stalling on Friday, prospects for a strong dollar remain intact.

• On Thursday, Fed chief Powell said in a Marketplace radio interview he believes the U.S. economy remains in a “good place,” with recent government tax and spending programs likely to boost growth for perhaps three years.

The Fed released its semiannual report on monetary policy before Powell’s testimony to Congress next Tuesday and Wednesday. The report showed solid U.S. economic growth and the Fed expecting to keep raising rates gradually.

• Over seltzer water and gnocchi at the Reuters New York bureau, Dallas Federal Reserve President Robert Kaplan gave reporters and editors his views on interest rates, trade, and more.

An escalation of U.S. trade tariffs would harm the economy’s prospects, according to a Federal Reserve official who is making it his business to raise the alarm with lawmakers and government officials.

“I’m worried about logistics, supply chains, and there’s no doubt individual industries I speak to, this could have a material effect and already is, on soybeans for example. It’s already having a material effect on some industries but as far as the overall outlook for the U.S economy, it’s not yet sufficient to cause me to materially change my outlook but it’s something I’m watching very carefully.”

• “My base case is still… three for this year, not four. I could be convinced, by after the fall, that we should have a fourth but I haven’t made that judgement yet.”

“We expected 2018 to be a strong year for GDP growth, and we still believe that.”

“But I think some meaningful part of this is due to fiscal stimulus, not just the tax legislation but the budget agreement, and our analysis is, at the Dallas Fed, it will begin to fade somewhat in ‘19, more in ‘20, and we’ll gravitate down back to trend growth, or potential growth by ‘20 or ‘21 and so that is in the back of my mind.”

• China’s trade surplus with the United States swelled to a record in June as its overall exports remained solid, a result that could further inflame a bitter trade dispute with Washington.

China’s trade surplus with the United States, which is at the center of the tariff tussle, widened to a record monthly high of $28.97 billion, up from $24.58 billion in May, according to Reuters calculations based on official data going back to 2008.

• China is expected to report a modest slowdown in second-quarter economic growth on Monday, as the government’s efforts to tackle debt risks crimp activity and a trade war with the United States threatens exports.

• The European Union will open an annual meeting with China on Monday, and will be looking to fend off overtures for an anti-U.S. alliance as China seeks a European counterbalance to U.S. tariffs.

Premier Li Keqiang will host European Council President Donald Tusk and European Commission President Jean-Claude Juncker in Beijing, where the two sides could reinvigorate long-running investment treaty talks with the expected exchange of markets access offers for the first time.

The meeting is expected to produce a modest communique affirming the commitment of both sides to the multilateral trading system. Leaders failed to find sufficient consensus for such a joint statement after meetings in 2016 and 2017.

• The chief of Germany’s central bank, Jens Weidmann, warned the government of increasing risks of the economy cooling when he spoke at a July 6 cabinet meeting, business newspaper Handelsblatt reported, citing government sources.

The Handelsblatt report came after the central bank, the Bundesbank, last month cut its growth forecast for this year and said trade and political concerns had made the outlook for Germany’s still robust economy more uncertain.

In June, the Bundesbank forecast growth of 2.0 percent this year, far lower than the 2.5 percent it expected last December.

• U.S. Secretary of State Mike Pompeo said that talks on Sunday between U.S. and North Korean officials to discuss the return of remains of U.S. service members killed in the 1950-53 Korean War “resulted in firm commitments” and that there would be a follow-up meeting on Monday.

• U.S. President Donald Trump said he intends to run for re-election in 2020 because “everybody wants me to” and there are no Democratic candidates who could defeat him, the Mail on Sunday newspaper reported.

• On the eve of his meeting with Russia’s Vladimir Putin, U.S. President Donald Trump rattled allies once more by labeling the European Union a “foe” with regard to trade.

In a pre-summit interview with CBS News’ “Face the Nation” program aired on Sunday, Trump lumped in the EU with China and Russia as U.S. economic adversaries. “I think the European Union is a foe, what they do to us in trade,” he said.

Trump and Putin will meet on Monday in Helsinki for their first stand-alone meeting since Trump took office in January 2017. Trump arrived in Helsinki on Sunday evening after spending the day playing golf at his private club in Scotland.

• Prime Minister Theresa May will on Monday seek to reassure aviation bosses that her under-fire Brexit plan won’t disrupt their supply chains, and promise that the industry will flourish as Britain leaves the European Union.

• Prime Minister Theresa May will face the anger of Brexit supporters in her party on Monday when they try to force her to change course on her strategy for leaving the European Union.

May is battling for her political survival after announcing a Brexit negotiating strategy that enraged eurosceptics in her Conservative Party, who see it as a plan to keep Britain too closely tied to Brussels.

• Oil prices rose about 1 percent on Friday as strike actions in Norway and Iraq hit supplies, but futures were set for a second straight week of decline after Libyan ports reopened and on the view that Iran might still export some crude despite U.S. sanctions.

Brent crude LCOc1 rose 88 cents to settle at $75.33 a barrel, a 1.18 percent gain. The global benchmark fell about 2.7 percent for the week.

West Texas Intermediate (WTI) crude CLc1 futures rose 68 cents to settle at $71.01 a barrel, but lost about 3.9 percent this week.

Reference: Reuters