· The dollar held firm on Tuesday as the euro struggled on more signs of economic trouble in the euro zone, while sterling wallowed near one-week lows before a key Supreme Court ruling related to the suspension of Britain’s parliament this month.
Traders were also keeping a watchful eye on Sino-U.S. trade talks which is set to resume next month, with constantly-shifting expectations on the prospect of a deal keeping markets on edge in the past month.
The dollar rose slightly against the yen to 107.59 and inched higher against a basket of currencies to 98.664. It was steady against the euro, which stayed under $1.10 mark where it had fallen on Monday following dismal readings on German manufacturing.
Sterling was also under the gun, wallowing at $1.2429, near a one-week low, ahead of a UK Supreme Court ruling due around 0930 GMT.
Overall, traders were cautious in light of the Brexit uncertainty, Sino-U.S. trade talks and a slowing global economy.
· U.S. Treasury Secretary Steven Mnuchin told Fox Business that discussions were scheduled in two weeks and that he and U.S. Trade Representative Robert Lighthizer would meet Chinese Vice Premier Liu He.
· DXY is adding to Monday’s gains neat 98.70 although still somewhat below recent tops in the 98.80/85 band.
A potential move to last week’s top at 99.10 remains well on the cards as long as the 55-day SMA at 97.96 holds the downside in the near term.
If the index manages to clear this area of resistance, it should then target 98.93 (high August 1st) ahead of the 2019 high at 99.37(September 3rd).
· The Washington Post has reported that Speaker Nancy Pelosi has been quietly sounding out top allies and lawmakers about whether the time has come to impeach President Trump - This is according to multiple Democratic officials, which the Washington Posts says is a major development in the ongoing investigation of the president that suggests the House could eventually vote to oust him.
· The British Supreme Court is preparing to rule on the lawfulness of U.K. Prime Minister Boris Johnson’s decision to suspend Parliament on Tuesday.
U.K. Prime Minister Boris Johnson has refused to rule out the possibility that he might suspend the British parliament for a second time if the country’s Supreme Court rules that his first decision to do so was unlawful.
The ruling is due at 10:30 a.m. London time.
· The news wires have assumed that the United States and Japan may fall short of signing a trade deal this week, as negotiators from both countries grapple with how to resolve President Trump’s threat to place tariffs on cars from Japan. However, the trade agreement between the US and Japan will have no extra auto tariffs according to Japan's Kyodo News today, which has been a main sticking point which would otherwise be levies similar to those Trump has already placed on steel and aluminum imported from Japan, Europe and other nations.
Trade negotiations with the US have ended on a positive note and President Trump and Prime Minister Abe are expected to sign a trade deal on Wednesday, Japan's Foreign Minister Motegi said on Monday.
· Further headlines are crossing the wires from the Bank of Japan (BOJ) Chief Kuroda, citing:
- Expect overseas growth to pick up sometime between latter half of this year through next year.
- Must be vigilant to chance pickup in overseas growth could be delayed.
- Must be more vigilant to risk impact of overseas slowdown reaches Japan’s inflation.
- As with other central banks, BOJ ready to take policy action as insurance against risks.
- Desirable for fx to move stably.
- Will continue to closely monitor impact fx moves could have on Japan’s economy, prices.
- BOJ’s loan scheme aimed at funnelling funds to industries with growth potential has played important role in reviving growth.
· Chinese state-owned enterprises receive preferential treatment from the government such as priority to get financing — which distorted competition in many industries, said the European Union Chamber of Commerce in China.
Such situation has worsened in recent years with the Chinese government “pursuing SOE reform with Chinese characteristics,” which aims to make SOEs “stronger, better and bigger,” said Joerg Wuttke, the chamber’s president.
“Sometimes, you want actually China to wake up and see you can’t only throw money at the economy. You actually have to change the structure,” he said.
· China has ample monetary policy tools and relatively large policy room to support its economy, the country’s central bank said on Tuesday, adding that the current interest rate levels are appropriate.
Dangers from shadow banking and key institutions have been steadily resolved, said the People’s Bank of China (PBOC) in a statement handed out before a press conference, adding that the country’s financial risks are generally under control.
· Oil prices eased on Tuesday as weak manufacturing data from Europe and Japan focused market attention on the gloomy outlook for demand and away from uncertainty around supply disruptions in Saudi Arabia.
Brent crude futures LCOc1 fell 40 cents to $64.37 a barrel by 0624 GMT, while U.S. West Texas Intermediate (WTI) futures CLc1 were at $58.31, down 33 cents.
Reference: Reuters, CNBC, FX Street
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