· The euro dropped to its lowest level in more than a week against the dollar on Thursday on concerns about next week’s European parliamentary elections, while the dollar was buoyed by ongoing U.S.-China trade tensions.
The euro was steady at $1.1175 after falling to $1.1166 overnight, its lowest since May 6. The single currency has shed 0.55% this week.
The euro has been hurt in recent days by Italian Deputy Prime Minister Matteo Salvini’s comments that European Union rules harm the country. Salvini said on Thursday that he would “tear apart” rules that are “strangling” Italy if his party scores well in a European parliamentary election later this month.
· “Italy remains one of the factors keeping euro downside risks high,” said Credit Agricole FX strategist Manuel Olivieri.
· The dollar has benefited as a safe-haven currency even as the United States and China remain locked in a trade dispute.
The dollar index versus a basket of six major currencies was at 97.832 after reaching 97.882 on Thursday, its highest since May 3.
The greenback was also bolstered on Thursday by data that showed U.S. homebuilding increased more than expected in April, while a Philadelphia Fed index of business conditions gained in May.
The Chinese yuan weakened as far as 6.9299 against the dollar on Thursday, its weakest level since Nov. 30.
· Over the last month the U.S.-China trade war has boosted the risk of a U.S. recession, say a strong majority of economists polled by Reuters, who now put the chances of that happening in the next two years at 40%.
That is up from a median 35% in last month’s poll, the first time it had dipped slightly from where it held since December last year, before a crushing sell-off on Wall Street as 2018 came to a close, in part because of those worries.
The U.S. economy is forecast to have already lost considerable momentum, slowing to 2.0% in the current quarter from 3.2% in the first three months of the year, according to median forecasts from the latest monthly poll of 120 economists.
· U.S. Commerce Secretary Wilbur Ross said on Thursday that an order blacklisting Chinese telecoms giant Huawei Technologies Co Ltd will go into effect on Friday.
“The order dealing with Huawei itself will be effective tomorrow,” Ross said in an interview with Bloomberg Television and Radio. The executive order, which was announced on Wednesday, barred Huawei from acquiring components and technology from U.S. firms without government approval.
· Italian Deputy Prime Minister Matteo Salvini excoriated German Chancellor Angela Merkel and French President Emmanuel Macron on Thursday, accusing them of having “ruined” Europe -- after Merkel said he wasn’t welcome in her center-right European party.
· Boris Johnson, the face of the campaign for Britain to leave the European Union, said on Thursday he will be standing as a candidate to replace Prime Minister Theresa May as Conservative leader.
May will set out a timetable for her departure in early June after the latest attempt to get her Brexit deal approved by parliament, meaning a leadership contest is likely to take place during the summer.
· Several senior Conservatives are expected to enter the contest for the leadership.
The international development minister Rory Stewart and former work and pensions minister Esther McVey have announced they will run and leader of the House of Commons Andrea Leadsom has said she is “considering” standing.
Other possible contenders include former and current members of the cabinet, including environment minister Michael Gove, the interior minister Sajid Javid and foreign minister Jeremy Hunt.
· Brexit talks between Prime Minister Theresa May’s Conservatives and the opposition Labour Party will soon draw to a close after the ruling party gave up on finding a compromise to break the Brexit impasse, a BBC reporter said on Thursday.
· Oil prices jumped as much as 2% on Thursday as tensions in the Middle East grew, with a Saudi-led coalition launching air strikes in retaliation for recent attacks on its oil infrastructure.
U.S. West Texas Intermediate crude futures settled 85 cents higher at $62.87 per barrel, gaining 1.4% and closing at the highest level in two weeks.
Brent crude futures rose 85 cents, or 1.2%, to $72.62. Brent, the international benchmark for oil prices, touched its highest level in three weeks earlier in the session.
· The Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week.
Reference: CNBC, Reuters
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