· The U.S. dollar fell across the board on Wednesday as dismal U.S. retail sales data painted a gloomy picture of the economy and supported the case for further interest rate cuts by the Federal Reserve.
The dollar index .DXY, which measures the U.S. currency against six major currencies, was down 0.30% at 97.998.
U.S. retail sales fell for the first time in seven months in September, suggesting that manufacturing-led weakness could be spreading to the broader economy.
With two weeks to go until their next policy meeting, U.S. central bankers remain divided about the need to cut borrowing costs for a third time this year.
Increased trade tensions between Washington and Beijing have generally been supportive of the dollar as investors view the United States to be in better shape than its rivals to weather a trade war.
China's onshore spot yuan CNY=CFXS ended the domestic session at 7.1030 per dollar, the weakest such close since Oct. 10, after Beijing criticized new U.S. legislation backing pro-democracy protests in Hong Kong.
Sterling swung around five-month highs amid a blizzard of contradictory headlines about whether Britain and the European Union were on the verge of agreeing a Brexit deal.
A Brexit deal looked close at hand but Prime Minister Boris Johnson still has work to do at home to ensure his government and factious parliament approve the plan.
· U.S. and China’s “substantial” deal is already looking hazy, especially regarding China’s promise to hike its purchase of agricultural products, The Wall Street Journal reported Wednesday.
Uncertainty reigns over China’s commitment to buy more farm products from the U.S. Reports say details are lacking over time frame and amount of purchases that were promised.
During trade talks last week, President Donald Trump said China agreed to purchase about $40 billion to $50 billion worth of U.S. agricultural products “in less than two years.” However, it is unclear what the U.S. might have to concede in return for this aspect of the deal, and if tariffs slated for December could be used as leverage.
The U.S. is schedule to impose a new 15% tariffs on more than $150 billion in goods on Dec. 15.
· U.S. and Chinese trade negotiators are working on nailing down a Phase 1 trade deal text for their presidents to sign next month, U.S. Treasury Secretary Steven Mnuchin said on Wednesday, adding that he was prepared to travel to Beijing for more meetings if necessary.
· World Bank President David Malpass said the development lender will likely again downgrade its global growth outlook amid uncertainty over falling trade and investment flows, but he stopped short of calling on the United States and China to resolve their trade war.
“As we look at the data today, we will probably be looking at a further downgrade from our June downgrade,” Malpass told reporters at the start of World Bank and International Monetary Fund annual meetings.
The World Bank in June cut its global growth forecast for 2019 by 0.3 percentage point to 2.6 percent, about the same level as 2016.
The IMF on Tuesday released a new forecast that showed global growth slipping to its lowest level since the 2008-2009 financial crisis, due largely to trade conflicts.
· Trade tensions between the United States and China - the world’s two largest economies - are a significant source of risk for the global economy, with “real spillover effects” for emerging markets, top IMF officials said on Wednesday.
Tobias Adrian, director of the monetary and capital markets department of the International Monetary Fund, told reporters the tit-for-tat trade war between Washington and Beijing had a significant impact on financial markets over the past two years. The fight could set up a “domino effect” for smaller economies, according to a second IMF official.
· The U.S. economy expanded at a slight to modest pace in September and early October but many firms are more downbeat about the months ahead, a Federal Reserve report said on Wednesday, the latest sign that the impact of U.S. trade policies continues to cloud the country’s economic outlook.
“Business contacts mostly expect the economic expansion to continue; however, many lowered their outlooks for growth in the coming six to 12 months,” the Fed said in its report.
· President Donald Trump on Wednesday said that charging additional tariffs on European imports could instantly resolve trade issues between the United States and European Union but he was not ready to add levies at this point.
U.S. President Donald Trump on Wednesday said Washington was in talks with “some new people” in Europe about trade issues and he hoped the discussions would be successful, as Italy’s president urged Trump to avoid counterproductive tariffs.
Italian President Sergio Mattarella told reporters ahead of his meeting with Trump that he hoped the two allies could cooperate on trade issues and avoid retaliatory tariffs.
There is a good chance that Britain and the European Union can strike a Brexit deal but it has not been done yet, British culture minister Nicky Morgan said on Wednesday.
“I think there is a good chance of there being a deal,” Morgan said in an interview on ITV’s Peston show.
“Nothing (has been) agreed or announced yet, and of course there is a chance that actually a deal is not agreed. So I think we have to wait.”
· Australia’s property downturn is hitting household consumption and is a big drag on economic growth and inflation that will likely last at least another year, despite three interest rate cuts, a senior central bank official said on Thursday.
· Oil rose on Wednesday, gaining support due to signs that OPEC and allied producers will continue to curb supplies in December, a weaker U.S. dollar and as traders covered short positions ahead of an industry report on U.S. crude inventories.
Brent crude LCOc1, the global benchmark, rose 68 cents, or 1.16%, to settle at $59.42 a barrel. U.S. crude CLc1 gained 55 cents, or 1.04%, to settle at $53.36.
But oil prices pared gains in post-settlement trade after industry data showed a larger-than-expected increase in U.S. oil stocks. Brent edged lower to $59.15, and WTI to $53.07.
U.S. crude inventories in the week to Oct. 11 rose to 432.5 million barrels, according to the American Petroleum Institute’s weekly report ahead of government stocks data due on Thursday. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.6 million barrels, API said. [EIA/S]
Analysts had estimated U.S. crude inventories rose around 2.8 million barrels last week.
The Organization of the Petroleum Exporting Countries and its allies meet on Dec. 5-6 in Vienna to review output policy.
Reference: Reuters, CNBC
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