· The dollar rose against the on Friday in choppy trading, boosted by technical factors after the single currency hit key resistance levels, even as the greenback’s outlook remained bleak amid cautious signals from the Federal Reserve about further rate hikes.
· “It seems like we’re getting some model and stop-loss buying on the dollar after the euro hit resistance on the upside,” said John Doyle, vice president of dealing and trading at Tempus Inc. in Washington.
“I don’t see any fundamental driver to this move. The sharpest move was in euro/dollar and it has become this across-the-board buying of the dollar,” he added.
That said, investors remained wary of pushing the dollar a lot higher.
· This week’s Fed minutes, which underscored the U.S. central bank’s flexibility on monetary policy, triggered dollar selling that lifted the euro as high as $1.1581 and propelled it past a 100-day moving average for the first time in three months.
Markets, however, are pricing in no further rate hikes by the Fed this year.
· In mid-morning trading, the dollar index rose 0.14 percent to 95.67, with the euro falling 0.30 percent to $1.1464.
· In other trading, the Chinese yuan rose to its highest level since late July against the dollar, as China and the United States extended trade talks in Beijing. China also gave recent assurances of further fiscal boosts to its slowing economy, lifting the yuan as well.
· U.S. consumer prices fell for the first time in nine months in December amid a plunge in the cost of gasoline, but underlying inflation pressures remained firm as rental housing and healthcare costs rose steadily.
The Labor Department said on Friday its Consumer Price Index dipped 0.1 percent last month, the first drop and weakest reading since March. The CPI was unchanged in November. In the 12 months through December, the CPI rose 1.9 percent after increasing 2.2percent in November.
Excluding the volatile food and energy components, the CPI increased 0.2 percent, advancing by the same margin for a third straight month. In the 12 months through December, the so-called core CPI rose 2.2 percent, matching November's increase.
December's inflation readings were in line with economists' expectations. The Federal Reserve, which has a 2 percent inflation target, tracks a different measure, the core personal consumption expenditures (PCE) price index, for monetary policy.
The core PCE increased 1.9 percent year-on-year in November after rising 1.8 percent in October. It hit 2 percent in March for the first time since April 2012.
A sharp decline in oil prices amid an oversupply and slowing global economic growth is keeping overall inflation in check. Lower oil prices are also filtering through to core inflation via cheaper airline tickets.
While the Fed has forecast two rate hikes this year, moderate inflation pressures likely support recent statements by several policymakers, including Chairman Jerome Powell, for caution about raising interest rates this year.
· A partial U.S. government shutdown over President Donald Trump’s demand for $5.7 billion to build a wall along the U.S.-Mexico border entered its 22nd day on Saturday, making it the longest shuttering of federal agencies in U.S. history, with no end in sight.
The closure, which began on Dec. 22, broke a decades-old record by a 1995-1996 shutdown under former President Bill Clinton that lasted 21 days.
A Republican senator close to President Donald Trump on Sunday backed a temporary re-opening of the federal government, in the23rd day of the longest shutdown ever, to allow for talks on a spending agreement that could satisfy Trump’s border security demands.
· British Prime Minister Theresa May warned lawmakers on Sunday that failing to deliver Brexit would be catastrophic for democracy, in a plea for support two days before parliament is expected to reject her deal with Brussels.
Prime Minister Theresa May will say on Monday that lawmakers blocking Brexit is now a more likely outcome than Britain leaving the European Union without a deal.
· French far-right leader Marine Le Pen launched her campaign for the May 26 European Parliament election on Sunday with an appeal to the broad “yellow vest” protest movement that has rattled the government.
Born from a grassroots protest against high fuel prices, the yellow vests have become a broad and sometimes violent movement demanding more social justice for low-skilled workers left behind by globalisation, deregulation and EU integration.
· China will roll out a series of measures to maintain stable employment this year, the official Xinhua news agency reported on Sunday, citing the country’s human resources ministry.
China is grappling with the impact of a slowing economy amid a damaging trade dispute with the United States, its largest trading partner, and sources have said it plans to set a lower economic growth target of 6 to 6.5 percent in 2019, compared with “around” 6.5percent in 2018.
· China will step up its anti-corruption crackdown this year to focus on education, medical care, environmental protection and other major areas of concern to the public, the anti-graft watchdog said.
Fighting corruption has been a major priority during the administration of President Xi Jinping. He said last month that, while the Chinese Communist Party had won an “overwhelming victory” against graft, deep-seated corruption still needed to be weeded out.
· Oil prices fell about 2 percent on Friday amid worries about a global economic slowdown, but futures ended the week higher, keeping some gains from a week-long rally spurred by U.S.-China trade hopes.
U.S. West Texas Intermediate crude futures ended Friday’s session down $1, or 1.9 percent, at $51.59 a barrel. Brent crude futures fell $1.15, or 1.9 percent, to $60.53 a barrel, around 2:30 p.m. ET.
Friday’s pullback marked the end of a nine-day winning streak for crude futures, the best string of gains since January 2010 for WTI and April 2007 for Brent.
Still, both benchmarks posted their second week of gains, with WTI rising about 7.5 percent and Brent up 6 percent.
· OPEC Secretary General Mohammed Barkindo is largely optimistic over prospects of achieving a balanced oil market in 2019. But if one thing keeps him awake at night, it’s the U.S.-China trade war’s potential to disrupt growth in major Asian markets that import the highest proportion of the world’s crude.
· The United States has warned German companies involved in the Russian-led Nord Stream 2 gas pipeline that they could face sanctions if they stick with the project..
The pipeline, which would carry gas straight to Germany under the Baltic Sea, has also been criticized in some quarters because it would deprive Ukraine of lucrative gas transit fees, potentially making Kiev more vulnerable in the future.
Reference: CNBC, Reuters
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