· The U.S. dollar rose to a one-week high against the safe-haven Japanese yen on Wednesday on revived hopes for an amicable resolution to the U.S.-Chinese trade war, after a report that China is still open to agreeing to a partial trade deal with the United States.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 99.027 after bouncing from levels below 99.0 yesterday.
The report, from Bloomberg, cited an official with direct knowledge of the trade talks.
It comes a day after trade tensions flared again after the U.S. State Department said it has imposed visa restrictions on Chinese government and Communist Party officials it believes responsible for the detention or abuse of Muslim minorities in Xinjiang province.
Separately, the Financial Times newspaper reported that Chinese officials are offering to increase annual purchases of U.S. agricultural products as the two countries seek to resolve their trade dispute.
Vice Premier Liu He, China’s top trade negotiator, is scheduled to travel to Washington for their next round of trade talks on Thursday and Friday.
Against the yen, which tends to strengthen during times of geopolitical stress due to Japan’s standing as the world’s biggest creditor, the greenback was 0.43% higher at 107.53 yen.
Still, some analysts advocated caution on the latest bout of optimism around the U.S.-China trade talks.
· Sterling erased earlier gains on Wednesday after the Northern Irish party that supports the British government said it would emphatically oppose a reported European Union concession on the Irish backstop under any Brexit deal.
The pound was 0.05% lower against the dollar at $1.2211, after rising as high as $1.229.
· The European Union’s Brexit negotiator Michel Barnier said sealing a Brexit deal with Britain ahead of Oct. 31 would be “very difficult” and that the bloc cannot accept the latest proposal from London.
· China and the U.S. resume trade talks Thursday in a prickly atmosphere, and strategists say the best outcome could be a postponement of the next round of tariffs but not much else.
Strategists say it’s also more likely now that the Trump administration will agree to a trimmed-down trade deal that could lift some tariffs before year-end but pushes off some of the thornier issues, such as intellectual property and technology transfers, for future talks.
The negotiations are the first high-level talks in two months and come as other issues have been bubbling up in the increasingly tense relations between the U.S. and China. China is retaliating against the National Basketball Association by cutting back on its preseason tour and canceling broadcasts in China, after a Houston Rockets executive tweeted support for Hong Kong protesters.
The U.S. this week also blacklisted 28 Chinese companies, due to alleged human rights violations against Muslim minorities in China’s far-western region of Xinjiang. The list includes some of China’s next-generation companies involved in artificial intelligence and machine thinking. The U.S. had previously blacklisted Chinese telecom company Huawei for claims of cyber espionage.
· Without significant progress, Trump is set to hike the tariff rate on $250 billion worth of Chinese goods to 30% from 25% next Tuesday.
· The United States and China made no progress in deputy-level trade talks held during Monday and Tuesday in Washington, the South China Morning Post (SCMP) reported, citing unnamed sources with knowledge of the meetings.
The first minister-level meetings between the two countries in more than two months is set to begin on Thursday.
· President Donald Trump said on Wednesday there was a very good chance that the United States and China will reach a trade agreement.
Speaking to reporters a day before high-level trade talks resume in Washington, Trump said: “If we can make a deal, we’re going to make a deal, there’s a really good chance.”
“In my opinion China wants to make a deal more than I do,” he said.
· The Fed released minutes from its September meeting where the central bank approved a quarter-point rate cut.
Fed minutes show that “a few participants” at the September meeting said prices in futures markets “were currently suggesting greater provision of accommodation at coming meetings than they saw as appropriate.”
“It might become necessary for the Committee to seek a better alignment of market expectations regarding the policy rate path with policymakers’ own expectations for that path,” the minutes also said.
Minutes showed that trade was the overriding concern. The issue garnered 28 mentions in the document, with members repeatedly expressing concerns about the impact tariffs were having on business activity.
· The “significant” protection the U.S. Federal Reserve has from short-term political pressures also gives it an obligation to “clearly explain” monetary policy, Federal Reserve chairman Jerome Powell said on Wednesday.
“Because Congress has granted the Federal Reserve significant protections from short-term political pressures, we have an obligation to clearly explain what we are doing and why. And we have an obligation to actively engage the people we serve so that they and their elected representatives can hold us accountable,” Powell said.
The guards against political pressure on the Fed include 14-year terms for members of its Washington-based Board of Governors, which means in theory that only a two-term president can appoint a majority of board members. It also includes protections for the Fed chair, who, once appointed by a president and confirmed by the Senate, cannot be removed over disagreements about policy.
· Britons are holding off from trying to sell their homes due to uncertainty about when and how Britain will leave the European Union, according to a survey published on Thursday which adds to signs of a slowdown in the housing market.
The Royal Institution of Chartered Surveyors (RICS) said new sales instructions fell last month at the fastest pace since June 2016, when Britain voted to leave the EU in a referendum.
New buyer inquiries were down by the most since April, and sales fell by the most since February.
· Japanese manufacturers’ business outlook was less pessimistic in October while service-sector sentiment rose to a three-month high, the Reuters Tankan poll found, likely easing fears for now of the world’s third-largest economy falling into a recession.
· The rapid growth of Chinese tourism took a bit of a breather during the latest week-long National Day holiday, government data indicate.
The seven-day vacation from Oct. 1 to Oct. 7 is dubbed “Golden Week” and is one of the few major government-mandated holidays in a country where personal vacation days are few. This year’s National Day was particularly significant domestically since it revolved around massive celebrations on Oct. 1 for the 70th anniversary of the Communist Party’s rule.
Chinese tourist sites received 782 million visits during the holiday, up well over 7% from last year’s 726 million, according to the Ministry of Culture and Tourism. But, that’s slower than reported growth of more than 9% in 2018, and down from a 10% increase in 2017.
Retail and food and beverage sales from Oct. 1 to Oct. 7 grew 8.5% to 1.52 trillion yuan ($212.7 billion), according to the Ministry of Commerce. While a solid figure, that’s a slower pace than the Commerce Ministry’s claims of nearly 10% or higher growth for previous years.
· Oil prices were steady on Wednesday as Turkey launched an offensive in Syria that could disrupt crude production in the region and on hopes of progress in ending the U.S.-China trade war, but a build in U.S. crude inventories limited gains.
Brent crude was up 22 cents at $58.44 a barrel, and U.S. West Texas Intermediate crude was at $52.59, down 4 cents.
Reference: CNBC, Reuters
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