The dollar index against a basket of six major currencies was little changed at 96.608 after edging up about 0.15 percent overnight when long-term Treasury yields surged to a one-week high on news of progress in U.S.-China trade talks. [US/]
· The euro was 0.05 percent higher at $1.1340 and on track to gain 0.4 percent on the week.
Traders are watching out for Germany’s Ifo business climate index due later in the session for any potential catalysts for the common currency.
· The dollar was effectively flat at 110.73 yen following modest overnight losses. It was headed for a gain of roughly 0.2 percent this week.
· The Australian dollar was up 0.1 percent at $0.7094 after sliding more than 1 percent to a 10-day low the previous day on fears a ban on the country’s coal by a Chinese port would hurt Australia’s already slowing economy.
· The pound was steady at $1.3036 after inching lower overnight.
Sterling has swung wildly between a low of $1.2895 and a high of $1.3109 this week as British Prime Minister Theresa May tries to persuade European Commission chief Jean-Claude Juncker to modify her withdrawal deal and then get the tweaked agreement through parliament.
· EUR/USD Eyeing German GDP, Eurozone CPI, EU-US Trade Conflict?
The Euro might be watching tomorrow’s release of German GDP amid fears of slower growth in key Eurozone economies. Both the previous report and forecast are in line at 0.0%, but there are lingering fears that Germany may report a contraction. The risk being that if the largest Eurozone economy reports negative growth for two consecutive quarters, it will have entered an official technical recession.
In the more immediate time frame, EUR/USD has been struggling to consistently trade above 1.1358 and may dip toward the 1.1305 support if incoming German GDP comes in negative along with disappointing Eurozone CPI. The fundamental outlook for European political economy seems to suggest any substantial upward moves are not likely to occur anytime soon.
· EUR/GBP Technical Analysis: Focus on today's close
EUR/GBP created a classic doji candle yesterday, signaling indecision in the market place. A close below 0.8666 today would signal a continuation of the sell-off from the Feb. 14 high of 0.8840. A close above0.8704 (previous day's high) would confirm the bull doji reversal.
Looking at the hourly chart, a daily close above 0.8704 looks likely.
· AUD/USD Technical Analysis: Channel breakdown favors re-test of 0.7050
The channel breakdown seen in AUD/USD's 4-hour chart indicates the pair could soon fall back to recent lows near 0.7050.
It also means the probability of pair validating yesterday's bearish outside candle with a close below 0.7070 is high. That would open the doors for a deeper drop below the psychological support of 0.70.
· President Donald Trump will meet with China’s top trade negotiator Friday afternoon in Washington as the U.S. tries to forge a preliminary deal with its biggest economic rival before tariffs on some Chinese imports more than double next month.
The meeting with Chinese Vice Premier Liu He was listed on the White House’s daily schedule for 2:30 p.m. and would cap the latest round of talks in Washington. Plans for a meeting between Trump and Liu signal optimism that talks are making sufficient progress to warrant another face-to-face meeting between the two men.
Investors are keeping a close eye on negotiations considering a setback could undermine global markets as concerns grow that the bilateral tensions are hurting world trade. Shipping giant Maersk said Thursday that profit will fall short of expectations and the outlook for this year is bleak, while South Korea and Japan have reported declines in exports.
· China is proposing that it could buy an additional $30 billion a year of U.S. agricultural products including soybeans, corn and wheat as part of a possible trade deal being negotiated by the two countries, according to people with knowledge of the plan.
The offer to buy the extra farm produce would be part of the memoranda of understanding under discussion by U.S. and Chinese negotiators in Washington, according to the people, who asked not to be identified because the plans are confidential. The purchases would be on top of pre-trade war levels and continue for the period covered by the memoranda, they said.
· European ministers will begin debating on Friday how and when to start trade negotiations with the United States, aware that U.S. President Donald Trump may impose punitive tariffs on EU car imports if the bloc waits too long.
The European Commission has asked the EU’s 28 countries to approve two negotiating mandates so that formal talks can begin. Germany is keen to start as soon as possible, while France is reluctant to engage with Trump.
· The European Union’s Brexit negotiator Michel Barnier said on Friday that he cannot rule out the possibility that Britain’s EU withdrawal is pushed back.
Britain is due to leave the EU on March 29, but Prime Minister Theresa May is seeking further concessions on her Brexit deal in hope of winning the support of a deeply divided British Parliament.
“I cannot exclude (a postponement), but it’s not up to me to decide, it’s up to European leaders but they will ask the British what for,” Barnier said on Europe 1 radio.
“We don’t need much more time, what we need now is decisions,” he added.
· China's debt problem is set to worsen this year, according U.S. investment bank Morgan Stanley — but Beijing is expected to better manage the risks of people borrowing from non-official channels this time, compared to years ago.
China's debt in relation to its economy is expected to climb by three to four percentage points of its economy, Morgan Stanley's Chief China Economist Robin Xing told CNBC on Friday, referring to the debt-to-GDP ratio.
"Despite the temporary increase in the debt-to-GDP ratio, it's much more manageable and transparent than 2013 to 2017, when shadow banking was surging," Xing concluded.
The good news is that the stimulus will start to kick in, in the second quarter of this year, Morgan Stanley's Xing said.
"The economy is still quite weak in first quarter ... however we're seeing intensified easing efforts from the policy makers," he said. "By second quarter of this year, we think that real economic activity will start to improve, given that easing (will) start to work."
· Oil prices reversed earlier falls on Friday, lifted by OPEC’s ongoing supply cuts and hopes that Washington and Beijing may soon end their trade dispute.
Despite this, prices remained below 2019 peaks reached earlier this week as U.S. crude oil production hit a record 12 million barrels per day (bpd) and its exports also surged.
International Brent crude futures were at $67.15 per barrel at 0707 GMT, 8 cents above their last close, but below $67.38 per barrel reached earlier this week.
U.S. West Texas Intermediate (WTI) crude oil futures were at $57.06 per barrel, up 10 cents, but below this week’s $57.55 per barrel 2019 high.
· Traders said prices were lifted from earlier drops by hopes that Washington and Beijing could resolve their trade disputes, which have dented global economic growth, before a March 1 deadline, during negotiations this week.
· OPEC and some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million bpd to prevent a large supply overhang from growing.
Goldman Sachs said in a note it expects OPEC output to average 31.1 million bpd in 2019, down from 31.9 million bpd.
Reference: Reuters, CNBC, FX Street