· The dollar eased on Thursday, sliding to fresh one-week lows against the euro and yen as investor anxiety deepened over fresh signs of slowing U.S. economic growth and a broadening of global trade frictions.
The greenback fell overnight after data showed hiring by U.S. private employers had cooled in September, the latest indicator that the Sino-U.S. trade dispute is hurting the world’s largest economy.
It remained wobbly in Asian hours, while stocks tumbled as investors grappled with the deepening global economic gloom.
Adding to concerns, the United States won approval on Wednesday to levy tariffs on $7.5 billion worth of European goods over illegal subsidies handed to Airbus, threatening to trigger a transatlantic trade war.
Futures pricing indicated a 73% chance that the U.S. Federal Reserve will reduce benchmark interest rates to support the economy at its next meeting later this month.
That is up from about 60% a day earlier, but was not enough to drive a spirited flight from the dollar, which is also widely seen as a safety bet at times of economic or political uncertainty. The greenback held steady against a basket of currencies, just above 99 and not miles below the two year high 99.667 it hit on Tuesday.
The next readings on global economic health will be European August retail sales and a German service sector survey due on Thursday, and September’s U.S. non-manufacturing ISM survey due at 1400 GMT.
· The World Trade Organization has just authorized the U.S. to go ahead with its tariffs worth billions of dollars on the European Union — that’s “a big deal” that would hopefully bring both sides to the negotiating table, said a former high-ranking trade official under President Donald Trump.
But Washington and Brussels have not achieved much in their past trade negotiations, so the U.S. tariffs on $7.5 billion of European goods could stay in place for many months, said Clete Willems, who was deputy director of the National Economic Council, told CNBC’s “Squawk Box Asia” on Thursday.
“It’s a big deal: $7.5 billion is the largest retaliation number that the WTO has ever authorized. So, it’s a big victory for the United States,” said Willems, who’s now a partner at law firm Akin Gump after leaving his White House position in April.
· Hong Kong has reached a point of “no return,” one strategist told CNBC on Thursday.
“There is no return to what Hong Kong was. I don’t see the social situation being easily resolved, and I don’t see it getting better. So my forecast is pretty gloomy,” said David Roche, founder and strategist at research firm Independent Strategy.
On Tuesday, an 18-year-old protester was shot by a live bullet, amid violent brawls between the police and demonstrators on China’s National Day.
“The police have become the enemy especially after the shooting of the young school boy,” said longtime resident and business leader Allan Zeman. “They get provoked first and then of course they defend themselves.”
· U.K. Prime Minister Boris Johnson’s latest proposal to take his country out of the European Union would divide Ireland and therefore “is unlikely to work,” a strategist said on Thursday.
“I’m not saying it’s a complete sham because it moved forward on one particular point ... Boris did widen the scope, but the actual ins and outs of it are unlikely to work,” David Roche, president and global strategist at Independent Strategy, told CNBC’s “Squawk Box Asia.”
· Southeast Asia’s internet economy is forecast to reach $300 billion by 2025 as millions of people in the region take up online shopping and embrace ride-share food delivery, an industry report said on Thursday.
To hit that target, the online industry is expected to grow by 200% over the next five years from an estimated $100 billion this year, according to the report by Google, Singapore state investor Temasek Holdings and global business consultants Bain & Company.
· Bank of Japan board member Yukitoshi Funo said on Thursday that the global economy has shown no sign of a pick-up as its recovery has been delayed, and that the bruising Sino-U.S. trade war holds the key to its outlook.
· Hong Kong will use an emergency ordinance for the first time in more than a half a century in order to ban face masks at public gatherings, according to local news channel TVB.
· The United States does not believe that India is eligible for the grant of a special trade privilege but is renegotiating its terms after revoking the status earlier this year, U.S. Secretary of Commerce Wilbur Ross told Reuters on Thursday.
· A European Parliament Brexit group believes that the proposals put forward by the British government on Wednesday “do not represent a basis for an agreement”, according to the draft of a statement seen by Reuters ahead of release later in the day.
Separately, a senior EU official said British Prime Minister Boris Johnson’s proposal “can’t fly”, largely because it did not offer a solution for the border between Northern Ireland and Ireland once the UK province has left the EU’s customs union.
· Fiscal stimulus needs to play a more substantive role than usual in boosting the euro zone economy, but the current framework for spending is insufficient to deliver the needed boost, European Central Bank Vice President Luis de Guindos said on Thursday.
· Peace talks in Afghanistan must resume as soon as possible, Pakistan and the Taliban militant group urged on Thursday, after President Donald Trump broke off negotiations last month seeking to end the United States’ longest war.
· Oil futures rebounded on Thursday, reversing losses earlier in the day, as fears over the worsening global economic outlook that hit prices hard in the previous session gave way to modest hopes for progress in resolving the U.S.-China trade war.
Brent crude oil futures edged 10 cents higher, or 0.2%, to $57.79 a barrel by 0209 GMT, after tumbling 2% in the previous session.
U.S. West Texas Intermediate (WTI) crude futures were up 23 cents, or 0.4%, to $52.87 a barrel, after sinking by 1.8% on Wednesday.
Reference: Reuters, CNBC, FX Street
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