· The dollar rose to a more than five-week high against the euro after European Central Bank President Mario Draghi said economic risks have moved to the downside and near-term data is likely to be weaker than previously anticipated.
On Thursday, the ECB left its policy stance unchanged as expected, keeping a rate hike later this year on the table even as the euro zone economy suffers its biggest slowdown in half a decade.
The euro was last 0.71 percent lower against the dollar at $1.1299 after falling as low as $1.1308, its weakest since Dec. 17.
The dollar index, which tracks the greenback versus the euro, yen, sterling and three other currencies, was last up 0.48 percent at 96.58.
· The ECB left that guidance and interest rates unchanged at its meeting on Thursday. But Draghi's downbeat comments, including a reference to "downside" risks, will fuel market speculation that the bank will delay any rate hike, mirroring a more cautious approach by the U.S. Federal Reserve, and may offer new cheap loans to banks.
Investors see a rate hike only in mid-2020 while a Reuters poll of economists predicted the first rise in nearly a decade in the fourth quarter.
· The International Monetary Fund’s Managing Director, Christine Lagarde, told a panel in Davos that the current slowdown in China’s economy is “legitimate,” but warned it could pose a major risk if the downtrend started to accelerate.
Speaking at the World Economic Forum (WEF), Lagarde said while China’s slowing growth has been a concern, it looked to be under control.
· Amid a lack of tangible progress in trade talks between the U.S. and China, growing tensions around the world, as well as slowing economies, some on Wall Street are sounding the alarm that major international brands could soon fall out of favor.
· A synchronized global economic slowdown is under way and any escalation in the U.S.-China trade war would trigger a sharper downturn, according to Reuters polls of hundreds of economists from around the world.
That is a major shift in sentiment from just a year ago, when economists were optimistic about a significant global upturn. But an escalation in trade tensions and tightening financial conditions have hurt activity in most economies and dragged China’s growth last year to the weakest in 28 years.
The global economy is forecast to expand 3.5 percent this year, the second straight cut to the 2019 outlook after it was downgraded in the previous survey for the first time since polling began for that period in July 2017. In the last poll it was 3.6 percent.
That 3.5 percent lines up with the International Monetary Fund’s growth outlook released ahead of the World Economic Forum in Davos, which highlighted the challenges policymakers face as they tackle the risk of a serious slowdown.
· Liberal billionaire George Soros on Thursday warned that the U.S. and China, the world’s two largest economies, are locked in a “cold war that could soon turn into a hot one.”
His comments come at a time when investors are increasingly concerned about a serious economic downturn, with a long-running U.S.-China trade war souring business and consumer sentiment.
"The reality is that we are in a cold war that threatens to turn into a hot one," Soros said at a private dinner event at the World Economic Forum in Davos, Switzerland.
"An effective policy towards China can't be reduced to a slogan. It needs to be far more sophisticated, detailed and practical; and it must include an American economic response to the Belt and Road Initiative," he said.
· President Donald Trump said on Thursday if Senate Republican leader Mitch McConnell and Senate Democratic leader Chuck Schumer come to an agreement to end the partial government shutdown, he would support it.
“If they come to a reasonable agreement I would support it, yes,” Trump told reporters as he met with Republican lawmakers to discuss trade.
McConnell and Schumer met on Capitol Hill this afternoon after two bills to end the shutdown failed in Senate votes. “We’re talking,” Schumer said after his half-hour meeting with McConnell.
· A Republican U.S. representative on Thursday introduced White House-drafted legislation that would give President Donald Trump more power to levy tariffs on imported goods in an effort to pressure other countries to lower their duties and other trade barriers.
The measure offered by Representative Sean Duffy, which has been touted by Trump administration officials, has already been declared unacceptable by some Republican senators, including Senate Finance Committee Chairman Chuck Grassley.
Democrats, who control the House of Representatives and its legislative agenda, are unlikely to grant Trump more executive authority, especially as a standoff over the partial government shutdown drags on. A spokesman for House Speaker Nancy Pelosi could not immediately be reached for comment.
· Oil prices rose on Thursday, boosted by the U.S. threat of sanctions on OPEC member Venezuela, but gains were limited by U.S. data showing record high gasoline inventories and a large, unexpected build in crude stockpiles.
U.S. West Texas Intermediate futures ended Thursday’s session up 51 cents, or 1 percent, at $53.13. Brent crude futures were down 2 cents at $61.12 a barrel around 2:30 p.m. ET.
Washington signaled it could impose sanctions on Venezuela’s crude exports as Caracas descends further into political and economic turmoil.
Venezuela’s opposition leader Juan Guaido declared himself interim president on Wednesday, winning backing from Washington and parts of Latin America and prompting socialist Nicolas Maduro, the country’s leader since 2013, to break relations with the United States.
· The U.S. has thrown its support behind Venezuela's opposition leader and threatens to take further steps against President Nicolas Maduro's government, including new sanctions on the oil sector.
Venezuela's defense minister and Russia back embattled socialist dictator Nicolas Maduro.
The competing endorsements are creating a complicated picture in Caracas and raise the prospect of an international standoff.
Capital Economics economists say Venezuela has the makings of a situation so bad that it could bring about its own regime change.
The United States and a number of other countries are recognizing opposition leader Juan Guaido as Venezuela's interim president.
· The economists say Venezuela's hyperinflation could lead to a change of government, as it has in many other countries.
It's unclear whether the U.S. will put new sanctions on Venezuela but if it did, it would hurt an industry that's already in serious decline, and a main source of the country's revenues.
· The U.S. State Department on Thursday ordered some U.S. government workers to leave Venezuela and said U.S. citizens should consider leaving the country, one day after Washington recognized an opposition politician as Venezuela’s president.
Venezuelan President Nicolas Maduro broke off diplomatic relations with Washington and gave U.S. embassy personnel three days to leave the country after President Donald Trump on Wednesday recognized opposition leader Juan Guaido as president.
In a security alert, the U.S. Embassy in Caracas said non-emergency U.S. government employees had been told to leave Venezuela and American citizens should “strongly consider” departing while commercial flights were still available.
Reference: CNBC, Finance.Yahoo, Reuters
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