· The dollar steadied in Asian trade on Wednesday but remained on the defensive after the launch of a formal impeachment inquiry against President Donald Trump, while the political uncertainty added to worries about economies strained by the Sino-U.S. trade row.
Following reports Trump sought foreign help to smear Democratic presidential front-runner Joe Biden, House Speaker Nancy Pelosi announced the House would initiate a formal inquiry, saying Trump appeared to have undermined national security and violated the U.S. Constitution.
The dollar bounced slightly in Asia after falling in U.S. trade overnight following Pelosi’s move, which was announced late on Tuesday.
The dollar ticked up 0.2% to 107.28 yen, having slipped to a two-week low of 106.96 the previous day.
The euro, which was battered by weak euro zone economic data earlier this week, inched down 0.2% to $1.1001, a hair’s breath off Monday’s low of $1.0966.
· Elsewhere, the British pound found some support after the UK Supreme Court ruled that Prime Minister Boris Johnson’s decision to suspend parliament for five weeks was unlawful in a further blow to his ambition to pull Britain out of European Union next month with or without a deal.
Still, market players saw no signs of a sustainable rebound as the events further deepened the uncertainty investors now attach to the currency.
Sterling changed hands at $1.2467, down 0.2% on the back of a broad pullback in the dollar in Asia but still not far from two-month high of $1.2582 set last week.
· The dollar was also undermined by data showing U.S. consumer confidence fell by the most in nine months in September, far more than expected.
“Net-net, consumer confidence plunged in September which counts as a big surprise that may sidetrack the economic expansion that is relying on consumer spending to fuel growth,” said Chris Rupkey, chief financial economist at MUFG Bank in New York.
“This unwelcome news on souring consumer spirits is a startling new development that could even bring more rate cuts later this year from the Federal Reserve,” he said.
· Chinese State Councilor and Foreign Minister Wang Yi said in New York on Tuesday, that while his country has no intention of unseating the U.S. as the world leader, China expects America to “remove all unreasonable restrictions.”
Wang said he hopes the next round of trade negotiations would “produce a positive outcome” and emphasized the business opportunity for America in working with China.
· The move by Democrats in the U.S. Congress on Tuesday to launch a formal impeachment inquiry into President Donald Trump has caused nervousness on Wall Street - but history suggests investors need not worry.
While the uncertainty created by the move roiled the market, investors said the year-long U.S.-China trade war and damage it could do to the global economy remained the most pressing issues.
The removal of Trump, a Republican, from office appeared unlikely since it would require the Republican-controlled Senate to convict him in a trial by a two-thirds majority.
“It’s not going to happen, where you have a Republican Senate convict a sitting Republican president,” said BB&T Wealth Management Senior Vice President Bucky Hellwig, characterizing the 1998 impeachment of President Bill Clinton as a “nothing burger.”
· British Prime Minister Boris Johnson on Tuesday joked that if some British members of parliament had their way Brexit would be an endless process like the torment of the Greek mythological figure Prometheus.
British Prime Minister Boris Johnson on Tuesday joked that if some British members of parliament had their way Brexit would be an endless process like the torment of the Greek mythological figure Prometheus.
· Iranian President Hassan Rouhani will give a speech at the United Nations General Assembly on Wednesday that will likely determine whether Tehran will re-engage with the United States to ease the heightened tension between the longtime enemies.
Rouhani, the nuclear pact’s architect, has left the door open to diplomacy, saying that if sanctions were lifted, Washington could join nuclear talks between Tehran and other powers.
· On Tuesday, Trump’s rhetoric on China turned harsh once again as he delivered a stinging rebuke to Beijing’s trade practices at the United Nations General Assembly, saying he would not accept a “bad deal” in U.S.-China trade negotiations.
China’s top diplomat Wang Yi quickly hit back, saying Beijing would not be threatened on trade or allow interference in its affairs, including Hong Kong, while having no intention to “play the Game of Thrones on the world stage”.
“Trump’s speech was full of sensitive words for China - trade practices, currencies, freedom of religion and so on. It is not hard to imagine it will irritate China,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
“In the past China has reacted to U.S. pressure on trade by bringing down the yuan. It appears we are having that settings again,” he said.
The Chinese yuan was steady at 7.1088 per dollar in onshore trade, keeping some distance from 11-1/2-year lows of 7.1854 touched earlier this month.
· Escalating trade tensions between the United States and China have darkened the outlook for developing Asia, with the region expected to grow slower than previously predicted this year and next, the Asian Development Bank said on Wednesday.
Developing Asia, a group of 45 countries across Asia and the Pacific, will likely grow 5.4% this year and 5.5% next year, down from the 5.7% and 5.6% growth forecast in July, the ADB said in an update to its Asian Development Outlook report.
“The People’s Republic of China–U.S. trade conflict could well persist into 2020, while major global economies may struggle even more than we currently anticipate,” Yasuyuki Sawada, ADB’s chief economist, said in a statement.
China’s economy will probably grow 6.2% this year, the ADB said, weaker than its 6.3% projection in July. Growth in the Chinese mainland is projected to cool further to 6.0% in 2020. China is targeting 6.0% to 6.5% growth in 2019.
By sub-regions, South Asia will remain the fastest growing in Asia Pacific, even after the ADB trimmed its 2019 outlook to 6.2% from 6.6% as it also slashed its growth estimate for India to 6.5% from 7.0%. ADB maintained India’s 7.2% growth projection for next year.
Southeast Asia is also expected to end 2019 on a weaker note, with growth likely to slow to 4.5% compared with a previous forecast of 4.8% and from last year’s 5.1% pace. Growth next year is seen picking up to 4.7%, but still lower than the ADB’s 4.9% estimate in July.
· Opposition lawmakers have overwhelmingly welcomed the U.K. Supreme Court’s ruling that Prime Minister Boris Johnson acted unlawfully by suspending parliament for five weeks.
However, they remain divided over the best approach to Brexit ahead of the Parliament’s reopening late Wednesday morning.
Labour leader Jeremy Corbyn insisted he wants Johnson out of office, and this week he and his allies encouraged party members to endorse a policy at its annual conference that calls for Labour to maintain a broadly neutral stance on the U.K.’s continued EU membership. Twice this month Corbyn has shied away from the pursuit of a fresh national election, and on Tuesday he suggested that if Labour were to win an election, it would only hold a referendum six months later.
· Oil prices fell on Wednesday for a second day on worries that fuel demand could fall after U.S. President Donald Trump doused recent optimism over China-U.S. trade talks and reignited concerns about global economic growth.
Brent crude futures LCOc1 fell 52 cents to $62.58 a barrel by 0649 GMT, while U.S. West Texas Intermediate crude CLc1 dropped to $56.89, down 40 cents.
Both benchmarks have fallen to their lowest level since before the attack on Saudi Arabian oil facilities on Sept. 14.
· CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices dipped toward support guiding them higher since early August (now at 54.95). A daily close below that sets the stage to challenge a long-standing downside barrier near the $50/bbl figure. Alternatively, a move above resistance hurdles at 58.76 and 60.84 targets September’s top near 64.00.
Reference: Reuters, CNBC, FX Street
Thai
Eng