· The dollar rose against the euro on Wednesday as the single currency was pushed lower by worries about the euro zone economy, while sterling was strong ahead of a no-confidence vote in British Prime Minister Theresa May’s government.
The euro was down 0.05 percent against the dollar, last at $1.14, after being compressed earlier in the session to a 12-day trough of $1.138. Earlier this week, data showed Germany barely escaped a recession in the second half of2018 and European Central Bank chief Mario Draghi warned on Tuesday the euro zone economy was weaker than anticipated.
· “The dimmer outlook was acknowledged by outgoing ECB President Mario Draghi, a cautious tone that gave added traction to the euros slide from three-month highs,” said Joe Manimbo, senior market analyst at Western Union.
“Add it all up and it seems increasingly less likely that the ECB would be able to normalize monetary policy later this year.”
· The dollar index, which measures the greenback against a basket of its peers, changed hands at 96.075 at 7:36 a.m. HK/SIN. Meanwhile the Australian dollar traded at $0.7173 and the euro was at $1.1397.
· The British pound rose against the dollar on Wednesday after UK Prime Minister Theresa May survived a vote of no confidence in the parliament.
Sterling traded 0.1 percent higher at $1.2866 at 2:18 p.m. ET.
On Wednesday, 325 British lawmakers said they had confidence in the government, while 306 said they did not.
· Prime Minister Theresa May won a confidence vote in the British parliament on Wednesday and then appealed to MPs from across the political divide to come together to try to break the impasse on a Brexit divorce agreement.
MPs voted 325 to 306 that they had confidence in May’s government, just 24 hours after handing her European Union withdrawal deal a crushing defeat that left Britain’s exit from the bloc in disarray.
But with lawmakers (MPs) deadlocked on the way forward, the United Kingdom could face a disorderly “no-deal” Brexit, a delay to Brexit, or even another referendum on membership.
· Jamie Dimon, CEO of J.P. Morgan Chase, said earlier on Wednesday that a hard Brexit — meaning the UK leaves the union without access to the EU’s single market — would be a disaster for the country. Speaking at the Economic Club of New York, he said: “The Brits were dealt a bad hand and they played it badly.”
· Neel Kashkari, president of the Federal Reserve Bank of Minneapolis and a critic of big banks, on Wednesday said the biggest U.S. banks are “unquestionably” safer than they were before the 2007-2009 financial crisis.
The Fed’s ability to use monetary policy to safeguard the financial system is about even with the pre-crisis era, he also said, because although low interest rates mean the Fed has less room to cut to offset a downturn, the Fed now has plenty of experience with non-traditional tools like quantitative easing that it can use as well.
· With the partial U.S. government shutdown now in its 26th day, House Speaker Nancy Pelosi on Wednesday urged President Donald Trump to reschedule his State of the Union address - a move that could deny him the opportunity to use the pageantry of the speech to attack Democrats in their own chamber over the impasse.
With Trump’s address set for Jan. 29, Pelosi wrote him a letter citing security concerns because the Secret Service, which is required to provide security for the address, has not received funding during the dispute.
· U.S. President Donald Trump is likely to move ahead with tariffs on imported vehicles, a move that could prompt the European Union to agree a new trade deal, said Senate Finance Committee Chairman Charles Grassley on Wednesday.
U.S. Commerce Department recommendations into whether Trump should impose tariffs of up to 25 percent on imported cars and parts on national security grounds are due by mid-February. A Commerce Department spokeswoman declined to comment.
· China's central bank on Wednesday pumped a net 560 billion yuan ($83 billion) into its banking system — a record amount of money injected in one day — in a sign that the economy may be facing enormous stress.
The yield on the 10-year Chinese government bond fell below 3.1 percent on Wednesday afternoon, its lowest in more than two years, according to financial database Wind. Yields fall when bond prices rise, and a decline in yields typically signals expectations of a slowdown in economic growth.
Premier Li Keqiang on Wednesday acknowledged the economy faces difficulties and said the government aims to keep growth within a reasonable range through further stimulus.
In some regards, that could tip the scale eventually in trade talks. Officials in President Donald Trump's administration have said China's weak economy is a factor that has brought Beijing's negotiators to the table. But economists expect China's economy to stabilize by the middle of the year, around the time some expect U.S. growth to head lower, to a rate of just under 2 percent after a first-half pace of closer to 2.5 percent.
· Oil prices steadied on Wednesday after a 3 percent rise during the previous session, after data showed growing U.S. refined product inventories and record crude production, which could undermine global efforts to support prices.
U.S. West Texas Intermediate crude futures ended Wednesday’s session 20 cents higher at $52.31 a barrel. Brent crude oil futures rose 68 cents, or 1.1 percent, to $61.32 per barrel.
Reference: CNBC, Reuters
Thai
Eng