· The euro fell to a one-week low against the greenback on Wednesday, a day before the European Central Bank is expected to add further stimulus in a bid to boost the region’s economy.
ECB policymakers are leaning toward a package that includes a rate cut, a beefed-up pledge to keep rates low for longer and compensation for banks over the side-effects of negative rates, five sources familiar with the discussion said last week. Many also favor restarting asset buys, but opposition from some northern European countries is complicating this issue.
The euro was last down 0.31% on the day at $1.1009.
The yen was the weakest since Aug. 1 as optimism over U.S.-China trade talks boosted risk sentiment and reduced demand for safe havens.
China announced its first batch of tariff exemptions for 16 types of U.S. products, days ahead of a planned meeting between the two countries to try and de-escalate their bruising tariff row.
The dollar gained 0.20% to 107.74 yen.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.625 after rising to highs around the 98.7 handle yesterday.
Sterling also dipped after a Scottish court ruled on Wednesday that Prime Minister Boris Johnson’s suspension of the British parliament was unlawful, prompting immediate calls for lawmakers to return to work as the government and parliament battle over the future of Brexit.
The British pound fell 0.19% to $1.2322.
· U.S. data on Wednesday showed that U.S. producer prices unexpectedly rose in August and underlying producer prices rebounded, but that data will not change financial market expectations that the Federal Reserve will cut interest rates again next week to support a slowing economy. This weeks major economic focus will be consumer price inflation data on Thursday and retail sales data on Friday.
· President Donald Trump on Tuesday tweeted that he will be delaying $250 billion in tariffs on Chinese goods to October 15 from Oct 1 as a “gesture of good will” to China.
Trump said the postponement came “at the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary.”
The tariffs were set to increase to 30% from 25% on the goods.
· President Donald Trump on Wednesday continued his verbal assault on the Federal Reserve, which he blames for slowing the economy, tweeting that the central bank should cut interest rates to zero or even set negative interest rates. The president also called Fed officials “boneheads” in the tweet.
“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term,” he said.
A Fed spokesman declined comment on the latest Trump salvos.
· The European Central Bank is set to unveil fresh stimulus measures on Thursday to prop up the ailing euro zone economy, but its exact moves are far from certain and a decision that underwhelms markets risks pushing up borrowing costs.
With other major central banks easing monetary policy, Germany at risk of falling into recession and inflation expectations sliding, ECB President Mario Draghi has all but promised more support, putting all of the bank’s remaining tools in play.
However Draghi, who hands over the leadership of the central bank to Christine Lagarde at the end of October, will face push back from more conservative members of his Governing Council.
Some policymakers have voiced concerted, public opposition to more radical stimulus measures, particularly the restarting of bond purchases, known as quantitative easing.
Also, Draghi’s dovish talk has raised investors’ expectations so high that it will be difficult to fully deliver on them, leaving the ECB at risk of disappointing. This could see market interest rates increase, rather than fall.
Still, the ECB is expected to lower some of its growth and inflation projections, highlighting the broader risk to the economy.
· The British government’s plans for a no-deal Brexit warn of severe disruption to cross-Channel routes, affecting the supply of medicines and certain types of fresh foods, and say that protests and counter-protests will take place across the country, accompanied by a possible rise in public disorder.
The document, which looks at the worst that could happen if Britain leaves the European Union on Oct. 31 without a deal, said public and business readiness for such an outcome would likely be low, in part because of continued political confusion in the run-up to Brexit day.
· Business confidence among Japanese manufacturers has soured to hit the weakest level in 6-1/2 years, the Reuters Tankan poll for September showed, underscoring fears that the U.S.-China trade war is undermining Japan’s export-led economy.
The monthly poll, which tracks the Bank of Japan’s (BOJ) key tankan quarterly survey, found the service-sector mood improving from August - a sign solid domestic demand might offset external pains - but the reading was lower than three months ago.
· Oil prices tumbled more than 2% on Wednesday after a report that U.S. President Donald Trump weighed easing sanctions on Iran, which could boost global crude supply at a time of lingering worries about global energy demand.
Market participants cited a report from Bloomberg that Trump discussed easing sanctions on Iran to help secure a meeting with Iranian President Hassan Rouhani later this month.
The Bloomberg report, attributed to three unnamed sources, said then-National Security Advisor John Bolton argued against such a step.
Brent crude LCOc1 settled $1.57, or 2.5% lower, at $60.81 after hitting a session low of $60.52, while U.S. West Texas Intermediate CLc1 fell $1.65, or 2.9% to end the session at $55.75 a barrel after sliding as low as $55.61.
Reference: CNBC
Thai
Eng