• The euro fell to a two-month low on Thursday after European Central Bank President Mario Draghi said the bank would pursue its tightening policy despite fears about the monetary union’s economic and political future.
The ECB reaffirmed that its 2.6 trillion euro ($2.97 trillion) asset purchase programme will end this year and that interest rates could rise after next summer. The policy guidance has been consistent since June, even though the economic outlook has darkened while political turmoil in Italy looms over the currency bloc.
Although Draghi said he was confident the European Commission and Rome would reach a compromise over Italy’s budget plans, he failed to allay concerns about the risk of contagion from surging borrowing costs.
Italy would need to secure a bailout from the European Union if it is to receive any help from the European Central Bank to bring down its borrowing costs on financial markets, the ECB’s President Mario Draghi said on Thursday.
Against the dollar, the euro fell to $1.135, its lowest since Aug. 16. The single currency was last down 18 basis points on the day. The dollar index hit a two-month high of 96.732, last up 29 basis points from the open.
Sterling hit a six-week bottom of $1.280 after Draghi said the longer Brexit talks drag on, the more the private sector must prepare for the possibility that Britain could exit the European Union with no deal on future relations.
• U.S. business spending on equipment appeared to have remained slow in September and the goods trade deficit widened further as rising imports outpaced a rebound in exports, suggesting economic growth moderated in the third quarter.
• The recent cratering of stock markets is nowhere near severe enough to rattle confidence and significantly hurt U.S. business and consumer spending, a Fed official said on Thursday, in the latest unruffled message from the U.S. central bank.
In a speech, Loretta Mester, president of the Cleveland Fed, reinforced the U.S. central bank’s steady-as-she-goes expectation to keep gradually raising interest rates in the face of a nearly month-long fall in major U.S. equity indexes, which has been driven by worries over the effects of U.S. tariffs and a slowdown in China.
• A sustained stock market sell-off would need to factor into the Fed’s policy debate, just as would any steady shift in financial conditions, Federal Reserve vice chair Richard Clarida said on Thursday.
“Changes in financial conditions are something that is relevant for the economic outlook,” and need to be accounted for “if they are sustained,” Clarida said. That would include stock and other asset prices along with other financial market indicators.
• Credit rating agency Moody’s Investor Service changed its outlook on the U.S. retail industry to “positive” on Thursday, for the first time since July 2015, buoyed by optimism surrounding the economy and benefits from the retailers’ online investments.
Moody’s raised its 2018 sales growth forecast for U.S retail industry between 4.5 percent and 5.5 percent, from a prior range of 3.5 percent to 4.5 percent.
The agency also said online sales, which it expects to generate a “strong” operating profit growth in 2019, will continue to outpace overall retail growth as more companies harness e-commerce, which is still 15 percent of overall U.S. retail sales.
• Saudi Arabia’s public prosecutor said on Thursday the murder of journalist Jamal Khashoggi in the kingdom’s Istanbul consulate this month was premeditated, reversing previous official statements that the killing was unintended.
The Saudi disclosure came after CIA director Gina Haspel heard an audio recording of the killing during a fact-finding visit to Turkey this week.
• Top trade officials from 12 countries and the European Union on Thursday vowed to reform World Trade Organization rules in the face of U.S. actions that threaten to paralyze the body and address some of Washington’s complaints about Chinese subsidies.
The United States and China, which are locked in an escalating tariff war that is threatening the WTO’s foundations, were not invited to the meeting to discuss reform ideas, but Canadian Trade Minister Jim Carr said he would report outcomes to them and try to persuade them to join the reform effort.
• President Donald Trump’s administration may send up to 1,000 active-duty troops to the U.S.-Mexico border, officials said on Thursday, as Trump hammered away at the issue of illegal immigration ahead of congressional elections.
• Tokyo’s core consumer price inflation was unchanged in October from the previous month, government data showed on Friday, offering little encouragement for Japan’s central bank as it struggles to reach its ambitious 2 percent inflation target.
• Oil prices rose 1 percent on Thursday, following the U.S. stock market higher a day after Wall Street’s biggest drop since 2011 and as Saudi Arabia’s energy minister signaled major producers may have to intervene in crude markets to support prices.
Brent crude futures LCOc1 rose 72 cents to settle at $76.89 per barrel as U.S. equities rose amid strong corporate earnings. The global benchmark has lost almost $10 a barrel since hitting a high of$86.74 on Oct. 3.
U.S. crude CLc1 settled at $67.33, up 51 cents.
Reference: Reuters
Thai
Eng