• MTS Economic News 20190923

    23 Sep 2019 | Economic News

 

· The U.S. dollar rose against a basket of currencies on Friday, putting it on track for its first weekly increase in three, prompted by hopes of progress in U.S.-China trade talks and that the Federal Reserve would not lower rates aggressively.

Sterling retreated from a two-month high versus the greenback after the Irish foreign minister said that London and the European Union were not yet close to a Brexit deal.

U.S. and Chinese deputy trade negotiators are set to continue talks that began on Thursday in an effort to lay the groundwork for high-level discussions in early October that will determine whether the world’s biggest economies can reach a trade deal.

While tariffs and worries about protracted supply-chain disruption have hampered global business activity, the U.S. economy is still faring relatively well, analysts said.

“The U.S. economy is clearly doing better than anyone else,” said Joseph Trevisani, senior analyst at FX Street in New York. “I’m still in the stronger dollar camp.” With housing starts at a 12-year high and factory output rebounding in August, the longest U.S. expansion on record seems to have more legs, he said.

An index that tracks the dollar against a basket of six major currencies was up 0.31% at 98.58. It was on course to gain 0.3% on the week.

The euro fell 0.34% on the day at $1.1003, while the greenback slipped 0.11% to 107.935 yen.

The pound was down 0.34% at $1.2479 after touching a two-month high at $1.2582. It reached a four-month high of 87.875 pence per euro before easing to 88.03 pence, up 0.11 on the day.

Interest rates futures implied traders saw a 64% chance of another rate cut by year-end, compared with 69% late on Thursday, CME Group’s FedWatch program showed.


· Speculators boosted their net long bets on the U.S. dollar in the latest week to a five-week high, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

· U.S. and Chinese deputy negotiators held “productive” talks in Washington this week aimed at improving their trade relationship, the U.S. Trade Representative’s office said on Friday without offering further details.

“These discussions were productive, and the United States looks forward to welcoming a delegation from China for principal-level meetings in October,” USTR said in a brief statement.

· A U.S.-China trade deal appeared elusive on Friday after Chinese officials unexpectedly canceled a visit to farms in Montana and Nebraska as deputy trade negotiators wrapped up two days of negotiations in Washington.

Chinese agriculture officials that were due to visit U.S. farm states next week canceled their trip to Montana and Nebraska to return to China sooner than originally scheduled.


The cancellation came as trade talks were held in Washington and U.S. President Donald Trump said he wanted a complete trade deal with the Asian nation, not just an agreement for China to buy more U.S. agricultural goods.


· Negotiations between the U.S. and China may appear volatile at times, but there’s still a chance the two countries could resolve their differences over the longer term, the chairman of UBS said on Saturday.

“You have to look through these because there’ve been ups and downs in these negotiations, there’s been a lot of volatility on both sides about these negotiations,” Axel Weber, chairman of the Swiss wealth management giant, told CNBC’s Nancy Hungerford at the Singapore Summit.


“What we’re interested in is the long term developments and whilst there is a big dispute at the moment, I think there’s also potential for resolution. And the potential for resolution lies in the very fact that trade is really beneficial to both sides,” he said.


· After delivering a split-decision rate cut earlier this week, U.S. Federal Reserve officials put their divisions on full display Friday, with warnings of a slowdown on the one hand and financial risks on the other bookending talk of how well things are going.

Central bankers are often called on to speak with one voice, but the Fed now has three - those ready to reduce rates even lower to ward off economic risks, those who prefer to stand pat and watch the data for now, and those warning that the Fed may already be fueling a credit bubble.


“The economy is in a good place,” Fed Vice Chair Richard Clarida said in a CNBC interview, noting that while there are risks, there is also a “virtuous circle” under way of job gains, wage gains, and increased spending among households.


Consumption accounts for nearly 70% of the U.S. economy, and “I cannot think of a time in aggregate when the consumer has been in better shape,” Clarida said.


But even those who agree with lower rates see the situation differently, with St. Louis Fed President James Bullard arguing that the Fed should have cut deeper this week to ward off weakness that includes a manufacturing sector which “already appears to be in recession.”


· Dallas Fed President Robert Kaplan on Friday suggested the U.S. central bank could be done with easing monetary policy for the next several months at least, saying that he personally has penciled in no further interest rate cuts this year, and one for 2020.

“I submitted that we would end the year at 1.875%,” Kaplan told reporters after speaking here. “Does that mean I would be opposed to considering some further action? No. I’m open-minded.... but I don’t have a leaning toward taking more action this year.”

· The rise in co-working spaces, like those offered by WeWork, may be a source of financial instability that could make the next U.S. recession worse by sparking a run on commercial real estate, Boston Federal Reserve Bank President Eric Rosengren said on Friday.

“I am concerned that commercial real estate losses will be larger in the next downturn because of this growing feature of the real estate market, which could ultimately make runs and vacancies more likely due to this new leasing model,” Rosengren said in a speech at a credit markets conference at New York University’s Stern School of Business. He did not mention WeWork or any other company by name.


Rosengren also explained why he dissented against the central bank’s decision earlier this week to lower borrowing costs for a second time this year.


· Oil prices eased on Friday on renewed concern over the U.S.-China trade war, but futures still posted weekly gains, with Brent marking its biggest weekly increase since January, after an attack on Saudi Arabia’s energy industry last weekend.

Brent crude LCOc1 futures fell 12 cents to settle at $64.28 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 futures ended 4 cents lower at $58.09 a barrel.


For the week, however, Brent rose 6.7%, its biggest gain since January, while WTI gained 5.9%, the most since June.


· Iran’s recent warnings to Saudi Arabia are “ridiculous” and “laughable” Saudi minister of state for foreign affairs Adel al-Jubeir told CNBC amid ongoing investigations by the kingdom tying Iran to a major attack on its oil facilities.

Iranian Foreign Minister Javad Zarif said in an interview Friday that he hoped to avoid conflict, but that Iran was prepared for “all-out war” in the event of attack by Saudi or U.S. forces. He then questioned whether Saudi Arabia was ready to fight “to the last American soldier.”

· The United States aims to avoid war with Iran and the additional troops ordered to be deployed in the Gulf region are for “deterrence and defense,” U.S. Secretary of State Mike Pompeo said on Sunday.

· France’s foreign minister said on Sunday his country’s main aim at this week’s U.N. General Assembly meeting is to de-escalate tensions between the United States and Iran and that a meeting between their presidents was not the top priority.

· Iranian President Hassan Rouhani will present a plan for creating security in the Gulf in cooperation with other countries in the region when he attends the United Nations General Assembly in New York this week.

· Stena Impero, the British-flagged tanker detained by Iran on July 19, will be released soon, an Iranian maritime official said on Sunday, according to the semi-official Fars news agency.



Reference: CNBC, Reuters

MTS Gold Co., Ltd.
40,42,44, Sapsin Road, Wang Burapha Phirom Sub-district, Pranakorn District, Bangkok, 10200
Tel. 0 2770 7777 Fax. 0 2623 9366 E-mail: support@mtsgoldgroup.com