· The dollar declined against a basket of major currencies on Thursday, reversing earlier gains, after the Federal Reserve cut interest rates for the third time this year and its signal for a potential pause in the easing cycle was taken with a pinch of salt.
The dollar index .DXY rose to as high as 98.00 as Fed Chairman Jerome Powell spoke about its decision, the highest since Oct. 17, before slipping. The index was last down 0.4% at 97.29, its lowest level in a week.
The euro last changed hands at $1.1165 EUR=, down 0.1%, while the greenback last traded at 108.66 yen JPY=, 0.2% lower on the day.
The dollar was also pressured versus the safe-haven yen by the news that Chile has withdrawn as host of an APEC summit in November where the United States and China had been expected to take major steps toward ending a 15-month-old trade war.
“The fact that Chile has cancelled the mid-November APEC Summit should not be a deal breaker for the U.S. and China to reach a truce,” said Tai Hui, Asia chief market strategist at JPMogan Asset Management in Hong Kong.
“If the two sides were genuinely willing to reach an interim deal before mid-December, when the next scheduled hike in tariff on Chinese exports is due to take place, they will find a venue to get the deal done.”
· Lead negotiators from the U.S. and China will hold trade talks on the phone on Friday, China’s Ministry of Commerce said Thursday.
The announcement comes after news that Chile was canceling the Asia-Pacific Economic Cooperation summit due to domestic unrest. U.S. President Donald Trump and Chinese President Xi Jinping were expected to meet in mid-November at the summit in Santiago, to discuss a potential “phase one” trade agreement between the world’s two largest economies.
“The Chinese and U.S. trade delegations remain in close communication, (and) at this time there is smooth progress on negotiations,” the commerce ministry said in an online post, according to CNBC’s translation of the Chinese text.
“Both sides will continue to push ahead with the negotiations and other work as originally planned,” the statement said, adding the leaders of the discussions are set to hold a phone call on Friday.
· China on Thursday reported that factory activity shrank for the sixth straight month in October, with the official Purchasing Managers’ Index for manufacturing coming in at 49.3 in October.
Analysts polled by Reuters had expected October’s official manufacturing PMI to remain flat. PMI readings above 50 indicate expansion, while those below that level signal contraction.
In September, the official manufacturing PMI was 49.8, according to the country’s statistics bureau.
· Beijing could remove extra tariffs imposed since last year on U.S. farm products to ease the way for importers to buy up to $50 billion worth, rather than direct them to buy specific amounts, the head of a government-backed trade association said.
“What the government can do is to remove the extra tariffs, both sides need to do this. Then let the companies make the purchases based on their own will, and based on market rules,” Cao Derong, President of the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA) told Reuters in an interview late on Wednesday.
· Companies around the world need to focus on the economics of supply chains amid uncertainties such as the U.S.-China trade dispute and Brexit — the U.K.’s exit from the trade bloc, said the CEO of Barclays bank.
“Whether it’s Brexit or whether it’s the trade challenge between the U.S. and China, the real issue is supply chain,” Jes Staley told CNBC at the Barclays Asia Forum.
“As we globalize the world’s economy, supply chains are (the) mathematics of becoming a critical part of utilizing the most efficient assets irrespective of what country they are in,” said Staley.
· Following are comments from BOJ Governor Haruhiko Kuroda at his post-meeting news conference:
“Our new forward guidance is aimed at clarifying our stance that our policy bias is leaning toward additional monetary easing.”
“Our new forward guidance shows that we won’t see an end (to ultra-low rates) until way beyond spring 2020. We’ve said rates could remain low, or even lower, for some time.”
“Overseas economic risks are heightening. But the negative impact hasn’t spread much to the domestic demand. It’s not as if economic conditions have worsened sharply since our last policy meeting.”
· Oil prices rose on Thursday as investors banked on more economic stimulus by China after weak PMI data, partly recovering from losses in the previous session on a much larger than expected build in U.S. crude stocks.
Brent crude futures were up 39 cents, or 0.6%, at $61 a barrel by 0747 GMT. They dropped by 1.6% on Wednesday.
U.S. West Texas Intermediate (WTI) crude futures were up 30 cents, or 0.5%, at $55.36 after a 0.9% decline in the previous session.
Reference: Reuters, CNBC
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