· The U.S. dollar index rose on Friday, with the offshore Chinese yuan headed toward its biggest monthly decline in 25 years as the two countries prepared for the implementation of new retaliatory tariffs on Sunday.
The index was 0.45% higher at 98.95, closing the month virtually unchanged after having been whipped around by trade headlines. Against the dollar, the offshore yuan was 0.2% weaker at 7.157, set for a 3.6% fall in August, it’s biggest monthly drop since 1994.
The U.S. dollar has remained afloat amidst the trade war.
Also supporting the dollar was a report on Friday that U.S. consumer spending increased solidly in July as households bought a range of goods and services. But while that may allay some recession fears, the strong pace of consumption is unlikely to be sustained amid tepid income gains.
But on Friday, trade fears were subdued after the two countries on Thursday discussed upcoming face-to-face negotiations in September and China declined to comment on whether it would respond in kind to President Donald Trump’s latest round of tariffs.
· At around 7:42 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 1.52%, while the yield on the 30-year Treasury bond was also higher at around 1.983%.
Market focus is largely attuned to global trade developments, after China’s commerce ministry said Thursday that it was opposed to escalating trade tensions with Washington.
President Donald Trump also said Thursday that some trade discussions between both sides had taken place on Thursday, with more scheduled over the coming weeks.
Trade tensions have dominated market sentiment for much of this year, with wild swings in global markets as rhetoric between world’s two largest economies fluctuates from conciliatory to combative.
· The US has imposed fresh tariffs on $112bn (£92bn) of Chinese imported goods such as shoes, nappies and food.
The new tariffs are a sharp escalation in the bruising trade war, and could cost households $800 a year.
The move is the first phase of US President Donald Trump's latest plan to place 15% duties on $300bn of Chinese imports by the end of the year.
In response, Beijing introduced tariffs on US crude oil, the first time fuel has been targeted.
If fully imposed, Mr Trump's programme would mean that nearly all Chinese imports - worth about $550bn - would be subject to punitive tariffs.
What was initially a dispute over China's allegedly unfair trade practices is increasingly seen as a geopolitical power struggle.
· President Trump rattled Wall Street when he demanded U.S. firms move production out of China. But many have already taken steps to do so, and, in earnings calls just over the past month, dozens of chief executives have signaled plans to further diversify their supply chains amid the intensifying trade war.
Computer makers HP Inc. and Dell Technologies are reportedly contemplating moving up to 30% of their notebook production out of China.
· Britain’s main opposition Labour Party will do everything possible to stop a no-deal Brexit after parliament returns on Tuesday, its leader Jeremy Corbyn will say on Monday.
British lawmakers opposed to a no-deal Brexit will attempt to pass a law this week to stop Prime Minister Boris Johnson from letting Britain crash out of the European Union on Oct. 31, the opposition Labour Party’s Brexit spokesman said.
Senior minister Michael Gove refused, however, to guarantee the government would abide by any such legislation.
· Italy’s prime minister said on Sunday he expected to finalize talks over a new government by Wednesday, as the 5-Star Movement and Democratic Party were in intense discussions during the weekend to hammer out a deal on a common agenda and Cabinet posts.
· Japanese manufacturing activity declined for a fourth straight month in August amid flagging demand, a revised business survey showed on Monday, underlining a darkening outlook for the world’s third-largest economy.
The final Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) edged down to a seasonally adjusted 49.3 from 49.4 in July, and also off a preliminary 49.5.
“Japanese goods producers continued to signal difficult conditions during August,” said Joe Hayes, economist at IHS Markit, which compiles the survey.
“The sector was plagued by production cutbacks and flagging demand, which have been the trends so far in 2019. Softer growth across Asia, particularly in China, was reported to have dented export opportunities.”
· Thousands of protesters blocked roads and public transport links to Hong Kong airport on Sunday in a bid to draw world attention to their fight for democracy for the Chinese-ruled city which is facing its biggest political crisis in decades.
Planes were taking off and landing, with delays, but trains were suspended and approach roads to the airport impassable as protesters erected barricades and overturned trolleys at the airport and in the nearby new town of Tung Chung.
The MTR subway station in Tung Chung was closed and demonstrators smashed CCTV cameras and lamps with metal poles and dismantled station turnstiles.
· Oil futures fell on Friday ahead of a hurricane near the Florida coast that could dampen demand, but prices still posted the biggest weekly increase since early July, boosted by an easing of U.S.-China trade rhetoric.
Brent crude futures fell 65 cents, or 1.1%, to $60.43 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $1.61, or 2.8%, to settle at $55.10 a barrel.
Reference: CNBC, Reuters, BBC
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