· The dollar extended its losses against the euro, yen and other major currencies on Thursday as remarks from New York Federal Reserve President John Williams increased bets the central bank would lower interest rates at month-end.
Williams said Central bankers need to act quickly and forcefully when rates are low and economic growth is slowing.
Earlier, Williams delivered a speech at the annual meeting of the Central Bank Research Association in which he said, “It’s better to take preventative measures than to wait for disaster to unfold.”
The dollar index fell 0.42% to 96.81, after being mainly flat on the day.
After Williams’ comments, traders increased their bets that the Fed could go deeper than a quarter-point cut at its meeting in late July.
After Williams’ earlier remarks, market expectations for a 50 basis point rate cut leaped to about 59%, according to the CME’s Fedwatch tool. Prior to his speech, predictions for a half-point cut had hovered between 20% to 30%.
· Later, Fed Vice Chair Richard Clarida said on Fox Business News that cutting interest rats quickly is a good strategy. Market expectations for a half-point cut surged even higher to about 69%.
· The Wall Street Journal reported that trade negotiations with China are at an impasse. This is reportedly due to differences over restrictions on Huawei. On Tuesday, U.S. President Donald Trump said there’s still a long way to go before a deal with China can be reached.
· The number of Americans applying for unemployment benefits increased last week, suggesting strength in the labor market notwithstanding hints of an economic slowdown.
Claims for state unemployment benefits rose 8,000 to a seasonally adjusted 216,000 for the week ended July 13, the Labor Department said on Thursday. Meanwhile, data for the prior week was adjusted to show 1,000 fewer applications received than previously reported.
· Treasury Secretary Steven Mnuchin told CNBC on Thursday that he and U.S. Trade Representative Robert Lighthizer will talk with Chinese counterparts later in the day but “complicated issues” remain in the trade war.
“This will be the second conversation we’ve had. There has been conversation at the staff level,” Mnuchin said in a “Squawk Box ” interview. “We’re working under the direction of President Trump and President Xi from the meeting in Osaka and we’ll see where we get.”
Mnuchin added that if the call went well, he would expect in-person meetings to take place.
· The pace of companies moving production out of China is accelerating as more than 50 multinationals from Apple to Nintendo to Dell are rushing to escape the punitive tariffs placed by the U.S., according to the Nikkei Asian review.
American personal computer makers HP and Dell could move up to 30% of their notebook production in China to Southeast Asia, Nikkei reported. Apple has asked its major suppliers to assess the cost implications of moving 15% to 30% of their production capacity from China to India, according to an earlier report from the Nikkei.
Japan’s Nintendo is also going to pull a portion of its video game console production from China to Vietnam, according to Nikkei.
· President Donald Trump said Thursday that a U.S. Navy ship had destroyed an Iranian drone in a “defensive action,” escalating already high tensions in the oil-rich Gulf region.
The USS Boxer, an amphibious assault ship, took down the drone in the Strait of Hormuz earlier Thursday, Trump said.
The incident came four weeks after Iran shot down a U.S. surveillance drone flying over international airspace the same area, in what American officials at the time called an “unprovoked attack.”
And it came hours after Iran’s Revolutionary Guard seized a foreign tanker it accused of smuggling oil.
During an event at the White House, Trump said, “The Boxer took defensive action against an Iranian drone, which had closed into a very, very near distance, approximately 1000 yards, ignoring multiple calls to stand down and was threatening the safety of the ship and the ship’s crew.”
“The drone was immediately destroyed,” Trump said.
· South Korea’s Trade Ministry urged Japan on Friday to accept its request for another round of talks over Tokyo’s tighter export controls, which are seen threatening global microchip and smartphone display supply chains.
· Oil settled lower on Thursday, weighed down by weakness in U.S. equities markets and an expectation that crude output would rise in the Gulf of Mexico following last week’s hurricane in the region.
U.S. West Texas Intermediate crude futures fell $1.48 — or 2.6% — to settle at $55.30. The U.S. benchmark dropped 1.5% in the previous session, and 3% on Tuesday.
Brent crude futures fell $1.94, or more than 3%, at $61.72 a barrel by 2:36 p.m. ET. They fell 1% on Wednesday, and 3% on Tuesday.
U.S. offshore oil and gas production has continued to return to service since Hurricane Barry passed through the Gulf of Mexico last week, triggering platform evacuations and output cuts. Royal Dutch Shell, a top Gulf producer, said Wednesday it had resumed about 80% of its average daily production in the region.
Reference: CNBC, Reuters
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