· The dollar on Monday was broadly higher against safe-haven currencies such as the yen and Swiss franc, bolstered by higher risk appetite due to U.S.-China trade hopes and Friday’s generally upbeat U.S. non-farm payrolls report for October.
The euro slipped as investors awaited Christine Lagarde’s first speech as European Central Bank president. But the single currency remained near its highest levels in weeks after Ross said in the interview that Washington may not slap tariffs on imported vehicles after “good conversations” with automakers in the European Union, Japan and Korea. Tariffs have already been delayed once by six months, and trade experts say that could happen again.
Lagarde delivers her first address as ECB chief on Monday, and markets assume she will stick with the easy policy of her predecessor, Mario Draghi. That view was boosted by data showing Germany’s manufacturing sector remained stuck in recession and euro zone factory activity contracted sharply in October. In other currencies, the dollar rose 0.2% to 108.44 yen.
Against the Swiss franc, another safe haven, the dollar was up 0.2% at 0.9873 franc. World stock markets rallied, denting demand for safe-haven investments, after the world’s two largest economies both said on Friday they had made progress in trade talks.
U.S. officials said a Phase-1 deal could be signed this month. The Chinese yuan rose to a 12-week high of 7.0225 against the greenback in the offshore market as risk sentiment continued to improve. An index that tracks the dollar against six major currencies was last up 0.1% at 97.323, breaching the 200-day moving average of 97.303.
Sterling was flat to slightly down at $1.2925, after last month’s rally from $1.2200, as investors wagered there was less risk of a hard Brexit now that an election campaign was underway.
· San Francisco Federal Reserve President Mary Daly said Monday that the central bank’s three rate cuts leave the U.S. economy better positioned to withstand the risks of global slowdown, joining the chorus of policymakers saying it is time to let the Fed’s insurance cuts take effect.
· China is pushing U.S. President Donald Trump to remove more tariffs imposed in September ahead of the signing of the U.S.-China trade deal, Politico reported politi.co/2pG6B9M on Monday, citing three people familiar with internal discussions.
Beijing is also pressing the U.S. to remove a 15% tariff that was imposed on roughly $112 billion worth of Chinese goods on Sept. 1, but no decision has been made, Politico reported citing sources.
· President Christine Lagarde showered praise on one of the bank’s top critics on Monday, using her first speech since taking over at the ECB to signal a willingness to work with all sides.
In a speech that did not touch on monetary policy, Lagarde honoured former German Finance Minister Wolfgang Schaeuble’s commitment to a united Europe and his statesmanship since the fall of the Berlin Wall, which allowed a divided Germany to reunite.
While Lagarde has not discussed monetary policy in detail since she was appointed in the summer, initial hints suggest she plans no major changes until the ECB can conduct a broad review of its policy, target and tools
· The European Union argued on Monday for the withdrawal of tariffs imposed by U.S. President Donald Trump on metal imports in one of the most high-profile and potentially explosive cases to come to the World Trade Organization (WTO).
Trump set duties in 2018 of 25% on incoming steel and 10% on aluminum under a 1962 U.S. law that allows the president to restrict imports on grounds of national security.
The measures spurred nine complaints to the WTO from steel-exporting countries including China, India, Russia and Turkey. Canada and Mexico have since terminated their cases after agreeing an updated free trade pact with the United States.
The WTO panel, which is handling all seven cases, has said it will not deliver rulings before the final quarter of 2020, which means they may come after the U.S. presidential election on Nov. 3.
· New European Union hubs opened by British-based financial firms to avoid Brexit disruption will be scrutinised next year by the bloc’s markets watchdog to check whether they are gaming licensing requirements.
More than 300 investment firms, asset managers, banks, insurers and trading platforms in London have opened hubs in other EU countries in preparation for business after Britain’s planned departure, which has now been delayed three times.
· Oil prices rose on Monday, buoyed by an improved outlook for crude demand as better-than-expected U.S. jobs growth added to market hopes a preliminary U.S.-China trade deal would be reached this month.
Brent crude futures gained 47 cents to settle at $62.17 a barrel. US West Texas Intermediate gained 34 cents or 0.6% to settle at $56.54.
Both benchmarks traded near the highest in more than a month as market optimism about progress in U.S.-China trade negotiations propelled U.S. stock indexes to record highs on Monday, elevating oil. Energy shares gained the most of the 11 major S&P 500 sectors.
Chinese President Xi Jinping and U.S. President Donald Trump have been in continuous touch through “various means,” China said on Monday, when asked when and where the two leaders might meet to sign a trade deal.
On Friday, prices jumped by about $2 a barrel after U.S. officials said a deal could be signed this month.
Improved U.S. jobs growth numbers in October and the upward revisions of the two previous months, reported on Friday, also eased fears of a global economic slowdown that would slow crude demand, oil-market analysts said.
· The International Monetary Fund (IMF) believes one of South America’s smallest countries is likely to see a dramatic upswing in economic growth next year.
Guyana, a country of about 780,000 which shares a border with Brazil, Suriname and Venezuela in the northeast of South America, will see economic growth of 86% in 2020, according to the IMF. That’s up from 4.4% in 2019.
Such an explosive expansion of annualized real GDP (gross domestic product) would likely see Guyana register the fastest economic growth in the world next year. To be sure, Guyana’s projected economic expansion would be 40 times that of what is expected from the U.S. — the world’s largest economy.
“The reason the IMF is projecting that is because Guyana has the highest amount of oil for each individual person of any country in the world,” Natalia Davies Hidalgo, a freelance Latin American analyst, told CNBC via telephone on Monday.
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