· The dollar climbed to a two-week peak versus a basket of currencies on Friday, boosted by gains against the euro amid concerns about the Italian budget and a U.S. interest rate outlook that reflects multiple rate hikes until 2020.
The U.S. dollar also rose to a nine-month high against the yen.
As the third quarter winds down, the dollar index, a gauge of its value against six major currencies, was on track to post its second consecutive quarterly gain of about 0.7 percent. For the last six months, the greenback has advanced nearly 6 percent.
In mid-morning trading, the dollar index rose 0.4 percent to 95.302, rising for three straight sessions.
The dollar rose to a nine-month peak versus the yen of 113.63 yen, and was last up 0.1 percent at 113.51 yen.
The euro, meanwhile, slipped below $1.16 for the first time in two weeks after Italy’s government agreed on a budget seen by some investors as defying Brussels.
The single currency recorded its biggest one-day decline for nearly two months on Thursday as the battle over fiscal policy intensified in the euro zone’s third-largest economy.
· Financial markets are nervous that the Italian government’s spending plans will boost Italy’s debt, which is already the second highest in the euro zone as a share of economic output after Greece, near 131 percent of gross domestic product (GDP).
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The government is targeting a budget deficit at 2.4 percent of GDP, inside the 3 percent ceiling prescribed by EU rules.
· Investments will fuel Italian economic growth over the next two years and the debt level will be put on a downward path despite a significant increase in the budget deficit, Economy Minister Giovanni Tria said on Sunday.
· U.S. consumer spending increased steadily in August, supporting expectations of solid economic growth in the third quarter, while a measure of underlying inflation remained at the Federal Reserve’s 2 percent target for a fourth straight month.
· Mexican President-elect Andres Manuel Lopez Obrador said on Friday there was still time for Canada to join an updated North American Free Trade Agreement (NAFTA) between Mexico and the United States.
· With time fast running out, Canadian and U.S. negotiators “made lots of progress” on Sunday on a renewed NAFTA but had still not settled tough issues such as American tariffs and access to Canada’s dairy market, an official and sources said.
· U.S. Trade Representative Robert Lighthizer and White House adviser Jared Kushner planned to brief President Donald Trump on Sunday on progress in talks between Canadian and U.S. officials on NAFTA, a U.S. source familiar with the discussions said.
· Prime Minister Theresa May called on her party on Sunday to unite behind her plan to leave the European Union, making a direct appeal to critics by saying their desire for a free trade deal was at the heart of her Brexit proposals.
· Britain will leave the European Union “in fact, not just in name”, Brexit minister Dominic Raab will say on Monday, warning that London’s “willingness to compromise is not without limits” and leaving without a deal is very much an option.
· Leading Eurosceptic lawmaker Jacob Rees-Mogg on Sunday predicted that neither the British parliament or the European Union would accept Prime Minister Theresa May’s Brexit plan, and that leaving the bloc without an exit deal should hold no fear.
· The European Central Bank (ECB) expects interest rates to stay at their current level through the summer of next year and the scaling back of economic stimulus measures to be gradual, board member Benoit Coeure told Germany’s Taggespiegel.
· Growth in China’s manufacturing sector sputtered in September as both external and domestic demand weakened, two surveys showed on Sunday, raising the pressure on policymakers as U.S. tariffs appear to be inflicting a heavier toll on the Chinese economy.
For manufacturing, the official index fell to a seven-month low of 50.8 in September, from 51.3 in August and below a Reuters poll forecast of 51.2. That index has stayed above the50-point mark, which divides expansion from contraction, 26 straight months.
But the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell more than expected to 50.0 from 50.6 in August. Economists polled by Reuters had forecast 50.5 on average.
· Saudi Arabia’s government aims to increase spending by over 7 percent next year in an effort to boost sluggish economic growth, while continuing to cut its budget deficit gradually, finance ministry figures released on Sunday showed.
· U.S. President Donald Trump took his enthusiasm for his detente with North Korean leader Kim Jong Un to new heights on Saturday, declaring at a rally with supporters that “we fell in love” after exchanging letters.
· Trump and Kim have said they want to work toward denuclearizing the Korean peninsula, holding an unprecedented meeting earlier this year in Singapore to discuss the idea.
· Democratic U.S. senators expressed concern on Sunday over reports the White House was working with Republicans to narrow the scope of an FBI investigation into sexual assault allegations against Supreme Court nominee Brett Kavanaugh.
President Donald Trump bowed to pressure from moderate members of his Republican Party on Friday and ordered the probe after Christine Blasey Ford, a university professor, detailed her allegations at a Senate hearing that Kavanaugh assaulted her in 1982, when the two were in high school.
· Oil prices rose more than 1 percent on Friday, with Brent climbing to a four-year high, as U.S. sanctions on Tehran squeezed Iranian crude exports, tightening supply even as other key exporters increased production.
Brent crude LCOc1 futures rose $1 to settle at $82.72 a barrel. The session high of $82.87 was the contract’s highest since Nov. 10, 2014. In the third quarter, Brent has gained about4 percent.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose $1.13 to settle at $73.25 a barrel. The session high of $73.73 was the highest since July 11. The contract is up about 5percent this month but down around 1 percent for the quarter.
Reference: Reuters
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