· The Australian dollar fell versus the greenback on Friday after a private survey showed factory activity in China shrank by the most in almost three years in January.
The Australian dollar, often considered a barometer for global risk appetite, fell 0.22 percent to $0.7256.
China’s gloomy factory readings have brought global growth worries to the fore again, which is likely to benefit safe-haven currencies such as the Japanese yen.
The yen rose to 109.52 after hitting a two-week high in the previous session.
However, broader risk sentiment still remained fairly strong after U.S. President Donald Trump said on Thursday he would meet with Chinese President Xi Jinping soon to try and seal a comprehensive trade deal as the top U.S. negotiator reported “substantial progress” in two days of high-level talks.
The dollar index, a gauge of its value versus six major peers, rose 0.01 percent at 95.59. The index is set to end the week in the red, after losing 0.6 percent of its value last week.
The dollar is widely expected to weaken this year as the Federal Reserve turns more cautious about further rate increases.
· Trade talks between the United States and China could also have an impact on the dollar, which has acted as a safe-haven in times of uncertainty.
· President Trump said he wanted a “very big” trade deal with China, but he signalled there could be delays if talks fail to meet his goals of opening the Chinese economy broadly to U.S. industry and agriculture.
· Analysts say a comprehensive trade deal between the world’s two largest economies would most likely boost risk sentiment and lead to a weaker dollar.
· The euro was up 0.10 percent at $1.1455 after having fallen 0.3 percent in the last session. The single currency has not managed to gain despite broader dollar weakness as growth and inflation in the euro zone remain weaker than expected.
Indeed, Jens Weidmann, the Bundesbank president and a member of the European Central Bank Governing Council, painted a bleak picture of the German economy on Thursday, saying the slump in Europe’s largest economy will last longer than initially thought.
· Sterling, which is grappling with troubles of its own on uncertainty over a deal to avoid a chaotic British exit from the European Union, fell 0.14 percent at $1.3082. Analysts expect the British pound to remain volatile in the coming weeks.
· The Federal Reserve’s decision to stop raising interest rates puts a “fundamentally healthy” U.S. economy on track to further growth, Minneapolis Federal Reserve Bank President Neel Kashkari suggested on Sunday.
“I think we still have room to run in the U.S. economy,” Kashkari said at a town hall at a church in Long Lake, Minnesota.
“The U.S. economy is fundamentally healthy,” he added. The event was closed, but an audio recording was distributed afterward.
“We at the Fed cannot control if Europe has a crisis, or if China has a hard landing, but we can control our own mistakes; so if we can avoid tapping the brakes prematurely, I think the expansion can continue.”
Kashkari’s comments put a positive spin on last week’s decision.
· U.S. President Donald Trump said military intervention in Venezuela was “an option” as Western nations boost pressure on socialist leader Nicolas Maduro to step down, while the troubled OPEC nation’s ally Russia warned against “destructive meddling.”
· British Prime Minister Theresa May said on Sunday she would seek a “pragmatic solution” to a parliamentary impasse over the terms on which Britain leaves the European Union when she tries to reopen talks with Brussels.
With less than two months until Britain is due to leave the bloc on March 29, concerns are growing over the risk of a disorderly ‘no deal’ exit.
· Britain’s Brexit minister Stephen Barclay will hold a meeting of a new working group of Conservative lawmakers on Monday seeking to find an alternative plan to avoid a post-Brexit border in Ireland, Prime Minister Theresa May’s office said.
· Germany faces a 25 billion euro ($29 billion) budget shortfall by 2023, unless it tightens spending, as tax revenues are set to fall and public sector wages are on the rise, Bild newspaper reported, citing an internal government document.
The prospect of budget deficits would represent a dramatic deterioration in the finances of Europe’s biggest economy, which reported a 11.2 billion euro budget surplus last year.
Still, Bild added that ministries were warned at a budget planning meeting last week to keep costs under control, partly because of the rapid growth of the government wage bill, which is expected to swell to 35billion euros in 2020, from 31 billion euros in 2016.
· Chinese consumer spending is in better shape than indicated by retail sales data, analysts say, in what could be a positive sign amid a disconcerting slowdown in the world’s second-largest economy.
Retail sales growth may have faltered in 2018, but experts say that’s only one piece of the puzzle in an increasingly complex consumer landscape.
China’s retail sales figures are part of an eagerly-awaited set of monthly data that includes readings on industrial production and fixed asset investment.
Growth in retail sales slowed last year but a broader index that includes services and goods accelerated, providing a sign of optimism.
Chinese authorities want consumer spending to play a bigger role in driving growth in the world’s second-largest economy.
· Oil prices rose nearly 3 percent on Friday, after upbeat U.S. jobs data strengthened expectations for higher fuel demand and on signs that U.S. sanctions on Venezuelan exports have helped tighten supply.
Futures extended gains after data showed U.S. energy firms this week cut the number of operating oil rigs for a fourth time in the past five weeks, as some drillers follow through on plans to spend less on new wells this year.
U.S. West Texas Intermediate (WTI) futures ended Friday's session up $1.47, or 2.7 percent, at $55.26 a barrel. WTI posted a weekly gain of nearly 3 percent.
Brent crude oil futures rose $1.91 a barrel, or 3.1 percent, to $62.75 a barrel around 2:30 p.m. EST. The international benchmark was on track for a weekly gain of about 2 percent.
Reference: CNBC, Reuters
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