· The euro fell on Monday after German flash purchasing managers’ index survey data for September was weaker than expected, raising more fears about the health of the economy.
The single currency, trading around $1.10 before the numbers were released, dropped 0.4% to as weak as $1.0972 EUR=EBS, its weakest since Sept. 12.
The survey showed that the German private sector activity shrank for the first time in 6-1/2 years in September as a manufacturing recession deepened unexpectedly and growth in the service sector lost momentum.
The dollar was boosted by the euro’s decline, and its index - which measures the greenback against a basket of currencies - was last up 0.3% at 98.776 .DXY.
Elsewhere, foreign exchange markets were mostly quiet, though there were some signs of risk appetite as Japan’s yen weakened against higher-yielding FX after talks in Washington between U.S. and Chinese trade deputies were described as “productive”.
The yen was last down 0.2% at 107.75 yen per dollar JPY=EBS.
China's yuan added 0.1% to 7.112 yuan in offshore markets CNH=EBS.
Sterling slipped slightly to $1.2459 GBP=D3.
· As President Donald Trump puts pressure on Beijing to end unfair business practices, the Department of Justice has a warning for companies: Bolster your defenses.
“More cases are being opened that implicate trade secret theft” — and more of them point to China, said U.S. Deputy Assistant Attorney General Adam Hickey.
Since 2012, more than 80% of economic espionage cases brought by the department’s National Security Division have implicated China. The frequency of cases has been rising in recent years, according to Hickey.
· If Hong Kong loses its status as one of Asia’s top financial centers, it would be disastrous for the Asian financial hub, said the founder and chief executive officer of Citic Capital.
There is “no lack of competition for financial centers,” said Zhang Yichen, who is also chairman at the investment firm — a Hong Kong-based alternative investment arm of the Chinese financial conglomerate Citic Group.
Investors can turn to other cities like Singapore, Tokyo and Shanghai to access global capital markets, he told CNBC’s Amanda Drury at the Singapore Summit on Saturday.
“I think if Hong Kong doesn’t shape up, you shouldn’t have a sense of entitlement (that) it has to be the financial center,” he said. If the territory should lose that status, it “spells disaster because that’s the only industry these days that’s competitive.”
· Despite the Federal Reserve’s latest efforts to boost the economy, long-time market bear David Rosenberg warns a recession is coming.
The Gluskin Sheff chief economist and strategist predicts economic growth in the U.S. will turn negative sooner than most investors anticipate — setting the stage for a painful market pullback.
“There’s a recession coming in the next 12 months,” he said last Thursday on CNBC’s “Futures Now.
“The only reason that he said that he’s optimistic on the outlook is because of exactly what the Fed is doing which is breathing stimulus back into the economy,” said Rosenberg, who came into 2019 with a recession warning and has been known as a perma-bear on Wall Street for decades.
But according to Rosenberg, it’s just a matter of time until economic data sours and Powell is forced to resume easing in the coming months.
“I think that they’ll go in October and December and through 2020,” he added.
Whether the Fed cuts all the way to zero or not, Rosenberg speculates the outcome will be the same: Recession.
· Japanese foreign minister Toshimitsu Motegi said trade talks with the United States will bring peace of mind to farmers and automakers, according to an interview with public broadcaster NHK aired on Sunday ahead of a key bilateral meeting this week.
Motegi handled talks with U.S. Trade Representative Robert Lighthizer under his previous role as economy minister and is expected to meet him ahead of a summit between U.S. President Donald Trump and Prime Minister Shinzo Abe.
· China needs to develop a better system for financing smallbusinesses that drive innovation in the economy but currently struggle to access the funds they need for growth, a leading Chinese think-tank said in a report published Sunday.
· British Prime Minister Boris Johnson on Monday cautioned that there would be no Brexit breakthrough at talks with European leaders in New York as gaps remained but said significant progress had been made on striking a deal.
Johnson, who has vowed to deliver Brexit on Oct. 31 with or without a deal, will meet EU leaders on the sidelines of the United Nations General Assembly in New York including Germany’s Angela Merkel and Irish Prime Minister Leo Varadkar.
· British opposition Labour leader Jeremy Corbyn said on Sunday his party would guide him on how to campaign in a second Brexit referendum, pledging to offer voters a choice between staying in the European Union and a “credible” deal.
· Thomas Cook has ceased trading after talks failed to produce a funding lifeline for the ailing travel company, placing 9,000 British jobs at risk and triggering a huge repatriation effort to bring home 150,000 UK holidaymakers overseas.
The government and the CAA have now triggered the UK’s largest ever peacetime repatriation – codenamed Operation Matterhorn – to bring holidaymakers home.
· Oil prices rose more than 1% on Monday on doubts over how fast Saudi Arabia can restore full crude output after an attack earlier this month on its largest processing facility, and as tensions in the Middle East remained high.
Brent crude futures LCOc1 rose to as much as $65.50 per barrel. The front-month contract was at $65.04, up 76 cents, or 1.18% at 0645 GMT.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $58.73 a barrel, up 64 cents, or 1.1%, after earlier hitting a high of $59.39.
· CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices pulled back from last week’s explosive rally to settle at resistance-turned-support in the 58.03-76 area. A daily close below that paves the way to challenge support guiding prices higher from August lows, now at 54.71. Alternatively, a move back above 60.84 puts April’s swing high at 66.60 back in focus.
Reference: Reuters, CNBC, FX Street
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