· The dollar fell on Thursday, skidding to a six-month low versus the yen, after the U.S. Federal Reserve signaled it was ready to lower interest rates to combat growing domestic and global risks.
The Fed left interest rates unchanged on Wednesday as widely expected but said the case for lower rates was building, suggesting it could ease monetary policy as early as next month as it took stock of rising trade tensions and growing concerns about weak inflation.
The dollar fell to 107.54 yen, the lowest since January, and then pared some of its loses to trade at 107.63 yen, down 0.4% on the day.
· The greenback came under additional pressure after benchmark 10-year Treasury yields fell to the lowest in more than two years.
The dollar also took a knock after Bloomberg reported that U.S. President Donald Trump believes he has the authority to replace Fed Chair Jerome Powell and demote him to be a board governor.
The dollar index against a basket of six major currencies fell 0.2% to 97.572.
The yen held onto its gains versus the dollar after the Bank of Japan kept its ultra-loose monetary policy unchanged.
· The euro extended its gains, rising 0.3% to $1.1266.
· The pound also rose 0.3 to $1.2678. Sterling was buoyant ahead of the BOE’s policy meeting later on Thursday, where the central bank may strike a relatively more confident tone than its peers.
Sterling held on to gains against the dollar ahead of a Bank of England meeting where policymakers are expected to hint at more interest rate hikes.
However, the BOE could be an outlier as other central banks turn dovish and enter a rate cutting cycle, which increases the chance of further declines in bond yields on a global scale.
· Goldman Sachs Group Inc analysts now expect the U.S. Federal Reserve to cut interest rates in July and in September, according to a research note issued after Fed Chairman Jerome Powell on Wednesday signaled a rate cut as early as next month.
This marks a reversal for Goldman, whose economists said as recently as June 16 that the hurdle for rate cuts is “higher than widely believed.” Goldman is one of the 24 primary dealers that does business directly with the Fed.
· U.S. President Donald Trump believes that he has the authority to replace Federal Reserve Chair Jerome Powell and demote him to be a board governor, but is not planning to do so presently, Bloomberg reported on Wednesday, citing people familiar with the matter.
· President Donald Trump said on Wednesday he will meet with Russian President Vladimir Putin at next week’s G20 summit in Japan.
In an interview on Fox News, Trump said he would hold meetings with Putin and Chinese President Xi Jinping. Trump confirmed earlier this week he would be meeting with Xi.
“I want to get along with Russia, and I think we will. I want to get along with China, and I think we will. I’m meeting actually both of them next week in Japan at the G20,” Trump said on Fox News.
· U.S. federal authorities are investigating whether Deutsche Bank AG complied with laws meant to stop money laundering and other crimes, the New York Times reported on Wednesday, citing seven people it said were familiar with the inquiry.
Shares in Germany’s biggest bank were indicated to open 2.2% down on Thursday, according to brokerage Lang & Schwarz.
The investigation into Deutsche Bank is one element of several separate but overlapping government examinations into how illicit funds flow through the U.S. financial system, the Times reported, adding that several other banks are also being investigated.
· The Italian government proposes to use 5.2 billion euros ($5.9 billion) in expected improvements in its 2019 budget position to avoid European Union disciplinary action for excessive debt, financial daily Il Sole 24 Ore said on Thursday.
The newspaper said the improvements consisted of expected savings on forecast expenditure of about 2 billion euros and higher-than-expected revenues of 3.2 billion euros, saying Rome would offer to use these to reduce the forecast deficit.
“The package decided yesterday, in summary, is worth 5.2 billion euros in 2019 and would bring the deficit for this year to 2.2% (of gross domestic product)...,” Il Sole said.
· China will maintain its long-standing commitment to reform and opening up, Premier Li Keqiang told a group of visiting foreign chief executives on Thursday, adding that restrictions on access will be relaxed in more areas of the economy.
“We welcome more and more foreign investment to come to China,” Li said to a group of 19 business leaders at the Great Hall of the People including CEOs from Honeywell International Inc, Volkswagen AG, Nokia Oyj and Rio Tinto.
“We will also relax (restrictions on) access to even more fields to create a market-oriented, law-based internationalized business environment.”
· The Bank of Japan kept monetary policy steady on Thursday, preferring to save its dwindling ammunition as a darkening global growth outlook prompts other major central banks to drop hints of additional stimulus.
But the BOJ stressed anew that global risks were increasing as trade tensions and uncertainty over U.S. economic policies jolt financial markets, signaling that it, too, is leaning more toward ramping up - not whittling down - monetary support.
· China’s President Xi Jinping has arrived in North Korea, Chinese state media said on Thursday.
Xi will be in North Korea for two days, becoming the first Chinese leader to visit the reclusive country in 14 years, and could bring fresh support measures for its floundering, sanctions-bound economy.
· Hong Kong leader Carrie Lam on Tuesday signaled the end of a controversial extradition bill that she promoted and then postponed after some of the most violent protests since the former British colony returned to Chinese rule in 1997.
In a closely watched press conference, Lam apologized for the turmoil but refused to say the bill would be “withdrawn”, only that it wouldn’t be re-introduced during her time in office if public fears persist.
Lam, asked repeatedly whether she would quit, refused to do so, saying there remained important work ahead in the next three years, which would bring her to the end of her current five-year term of office.
· Oil prices climbed around 3% on Thursday amid escalating tensions in the Middle East as a U.S. official said one of the country’s military drones was shot down by an Iranian missile.
The drone was downed in international airspace over the Strait of Hormuz by an Iranian surface-to-air missile, a U.S. official said on Thursday, speaking on condition of anonymity.
Earlier, reports out of Iran said the nation’s Revolutionary Guards had downed a U.S. “spy” drone in the southern province of Hormozgan.
Brent crude futures were up $1.93, or 3.1%, at $63.75 a barrel around 0650 GMT, after rising as high as $63.88.
U.S. West Texas Intermediate (WTI) crude futures were up $1.73, or 3.2%, at $55.49 a barrel.
Reference: Reuters, CNBC
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