· The dollar held close to its 2019 high on Tuesday as U.S.-Sino trade tensions and global growth worries underpinned the greenback’s safe-haven appeal, while the euro and the British pound were hurt by troubles of their own.
Investors are focusing on high level trade talks in China this week where Washington is expected to keep pressing Beijing on long-standing demands that it make sweeping structural reforms to protect American companies’ intellectual property, to end policies aimed at forcing the transfer of technology to Chinese companies, and curb industrial subsidies.
The dollar index was steady at 97.06, after advancing 0.45 percent in the previous session, its largest percentage gain since Jan. 24.The index has risen for eight straight sessions, mainly thanks to a tumbling euro, which has the largest weighting in the index.
The single currency was off slightly at $1.1272 in early Asian trade, having lost nearly half a percent on Monday. The euro has weakened for six consecutive sessions, and traders expect further losses now that the crucial psychological support of $1.13 has been broken.
· “The next level of support for EUR/USD is the November low of 1.1215 which should be tested quickly,” said Kathy Lien, managing director of currency strategy at BK Asset Management.
· Elsewhere, sterling was marginally higher at $1.2857, after tumbling 0.75 percent in the previous session. Analysts expect the British pound to remain volatile due to the uncertainty surrounding Brexit.
The British parliament is set to hold a debate on Brexit on Feb. 14 where Prime Minister Theresa May is seeking changes to her deal with Brussels after it was rejected by a record majority in parliament last month.
· The top four Democratic and Republican congressional negotiators on border security funding resumed talks on Monday, with the possibility of another partial U.S. government shutdown looming if they fail to reach a deal by a Friday deadline.
The talks, which had broken down over the weekend, restarted in the U.S. Capitol just hours before a scheduled rally in the Texas border city of El Paso, where President Donald Trump will promote his promised wall along the U.S.-Mexico border, a proposal opposed by Democrats.
In Washington, the lawmakers hope to reach an agreement on Monday to allow time for the legislation to pass the House of Representatives and Senate and get Trump’s signature by Friday, when funding is due to expire for the Department of Homeland Security, the Justice Department and several other federal agencies.
· The U.S. Federal Reserve could hike interest rates once more by June despite a growing, near 50-50 chance of a 2020 recession, Vanguard Group Inc Chief Investment Officer Greg Davis said on Monday.
Davis sees steady inflation and an environment that can be supportive of corporate bonds and other relatively risky assets. Wage growth and other economic data could help the Fed raise rates once more before a “permanent” pause given heightened uncertainty on trade, geopolitics and other issues.
Growth in the United States will likely slow to 2 percent over the next year, with China’s rate at 6 percent and Europe’s at an anemic 1percent, he said.
Risks of a U.S. recession are 30 percent to 35 percent for 2019, but rise to between 40 percent and 50 percent for the year after, according to Vanguard’s models, Davis said.
· A March 6 hearing is set in Vancouver for Meng Wanzhou, the CFO of China tech giant Huawei, who was arrested there in December on fraud charges. The U.S. is seeking Meng's extradition, and Canada will weigh whether the charges against her merit fulfilling the request.
A second case centered on Huawei's alleged theft of trade secrets from T-Mobile is set to be heard by a judge in Washington on Feb.28.
Administration officials have said President Trump may be planning a widespread ban on Huawei's equipment, much of which supports5G internet connectivity.
· Oil prices fell on Monday as worries surrounding the resumption of U.S.-China trade talks overshadowed support from OPEC-led supply restraint.
Brent crude futures lost 63 cents, or 1 percent to $61.46 a barrel. U.S. West Texas Intermediate (WTI) crude settled 0.6 percent lower at $52.41 per barrel.
Trade talks between the United States and China resumed with working level discussions before high-level discussions later in the week.
While Beijing struck an upbeat note, it also expressed anger at a U.S. Navy mission through the disputed South China Sea. This cast a shadow as the two countries try to reach a deal before the March 1 deadline when U.S. tariffs on $200 billion worth of Chinese imports are scheduled to increase to 25 percent from 10 percent.
Escalating U.S.-China trade tensions have cost both countries billions of dollars and disrupted global trade and business flows, roiling financial markets.
Reference: Reuters, CNBC
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