· The U.S. dollar rose against a basket of major currencies on Tuesday, as investors awaited President Donald Trump’s State of the Union address for a possible update on the U.S.-China trade war.
Continued recovery in investors’ appetite for risk taking exerted pressure on safe-haven currencies, dragging the Swiss franc lower, while the Australian dollar climbed after the nation’s central bank warned of risks to growth and steered clear of an explicit policy-easing signal.
· The Federal Reserve should leave interest rates where they are until the U.S. economic outlook is clearer, Dallas Fed President Robert Kaplan said on Tuesday, a process that in his view could take several more months.
· The dollar index, which tracks the greenback versus the euro, yen, British pound and three other currencies, was up 0.21 percent at 96.06. The index, which hit a more than one-week high of 96.12 earlier in the session, is little changed for the year.
· The euro was 0.23 lower against the dollar after a survey showed on Tuesday that euro zone businesses expanded at their weakest rate since mid-2013 at the start of the year.
· Investors are shifting their attention to Trump’s impending State of the Union address at 9 p.m. eastern, which could hint at progress in U.S.-China trade talks.
· “Market focus is likely to be on any indications on how Sino-U.S trade negotiations are going; anything positive on the trade news front should provide support for the greenback,” Dean Popplewell, chief currency strategist at Oanda, said in a note.
· President Donald Trump’s State of the Union address is a wild card. If he uses the occasion to tease the likelihood of a trade deal with China and downplays the probability of another government shutdown over immigration policy, the markets' mood may brighten. The reverse is likely if he steers the other way.
· President Donald Trump will ask Congress in his State of the Union address on Tuesday to pass legislation to boost the nation’s aging infrastructure, but will not explain how to pay for it, administration officials said.
Trump is likely to set a benchmark of investing at least $1 trillion to build roads, bridges and other projects over the next decade, the officials said, but it is not clear if he will endorse new government spending for all or part of that amount.
In February 2018, Trump asked Congress to authorize $200 billion in federal money over 10 years to spur a projected $1.5 trillion in road, bridge and other projects mostly funded by states, cities and the private sector.
That plan was roundly criticized and was never voted on in Congress, which was then controlled by Republicans. Democrats now control the House of Representatives and are demanding that Trump back new revenue as a condition of moving forward with an infrastructure plan.
The State of the Union address is often subject to last-minute changes and the text could still change, aides said.
· Trump reportedly plans to meet with North Korea’s Kim Jong Un in Vietnam on February 27-28
· UK cabinet ministers have secretly held talks on plans to delay Brexit by eight weeks, the Telegraph newspaper reported late on Tuesday.
The delay would postpone Brexit to May 24. Currently, Britain is due to leave the European Union on March 29.
Prime Minister Theresa May will travel to Brussels on Thursday to tell European Union leaders they must accept legally binding changes to the Irish border arrangements of Britain’s divorce deal or face the prospect of a disorderly no-deal Brexit.
· Oil prices fell in choppy trade on Tuesday, pulling back from two-month highs after weak U.S. factory orders data rekindled economic slowdown worries.
Despite the slide, investors expect U.S. sanctions on Venezuela and production cuts led by OPEC to head off a glut this year, buoying prices.
U.S. West Texas Intermediate futures ended Tuesday’s session down 90 cents, or 1.7 percent, at $53.66 per barrel around 2:25 p.m. ET, near the day’s low of $53.47. WTI touched its highest in more than two months at $55.75 in the previous session.
International Brent crude futures were down 41 cents at $62.10 a barrel around 2:25 p.m. ET, near a session low at $61.72 and well off Monday’s two-month high of $63.63.
· Oil market conditions should improve over the coming months, BP CEO Bob Dudley told CNBC on Tuesday.
His comments come at a time when energy market participants expect U.S. sanctions on crisis-stricken Venezuela, as well as OPEC-led production cuts, to offset a potential supply glut this year.
“As we look it, it feels like the markets will be firmer,” Dudley said, when asked for his energy market forecast for 2019.
“I couldn’t predict the oil price but we are planning BP between $50 and $65,” he added.
· Saudi Arabia and a group of OPEC members are reportedly trying to commit Russia and other oil-producing nations to continue managing supply for up to three more years.
Reference: CNBC, Reuters
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