· The euro enjoyed a small respite on Monday, jumping to an 11-day high versus the U.S. dollar, on expectations that Washington and Beijing can soon sign off on a deal to end a trade war that has been a drag on global economic growth.
Faint optimism for a breakthrough was supported by a report on Sunday from Chinese state news wire Xinhua, which said the two sides had “constructive talks” over the weekend.
The euro was last up 0.1% at $1.1068, its highest since Nov. 7, and the index which tracks the greenback against six major currencies was down 0.1% at 97.90.
The offshore Chinese yuan, however, remained below 7 per dollar, last falling 0.1% to 7.0142. The yuan is the most sensitive currency to the trade dispute.
“USD/CNY above 7.0 suggests that the market is not yet convinced a solution is near,” said Marshall Gittler, chief strategist at FX analysis firm ACLS Global.
The liveliest mover, however, was the pound, creeping up 0.3% against the dollar to $1.2945 and against the euro to 85.41 pence. It has surged to a 17-day high versus the dollar and a six-month high versus the common currency.
Sterling was boosted by expectations that the Conservative Party could win a majority in the Dec. 12 election, as well as by British Prime Minister Boris Johnson saying that all Tory candidates in the election have pledged to back his Brexit deal. This could open the door to getting the Brexit deal agreement passed through parliament.
· The mood in Beijing about a trade deal is pessimistic due to President Donald Trump’s reluctance to roll back tariffs, which China believed the U.S. had agreed to, a government source told CNBC’s Eunice Yoon.
Stocks opened down on the trade headlines.
The Chinese are looking carefully at the political situation in the U.S. including the impeachment hearings and the presidential election, the source said, adding the officials are wondering if it is more rational to wait things out since it is unclear what Trump’s standing will be even in a few months.
There is disagreement over issues such as a specific number of agricultural purchases, the source said. The Chinese are resisting because, in part, they could risk alienating other trading partners, the source told CNBC.
· The Trump administration on Monday issued a new 90-day extension allowing U.S. companies to continue doing business with China’s Huawei Technologies Co Ltd as U.S. regulators continue crafting rules on telecommunications firms that pose national security risks.
Huawei said Monday the extension “won’t have a substantial impact on Huawei’s business either way. This decision does not change the fact that Huawei continues to be treated unfairly either.”
· President Donald Trump and Federal Reserve Chairman Jerome Powell, who have been at odds over the direction of monetary policy, met Monday to discuss a variety of economic issues.
The two, along with Treasury Secretary Steven Mnuchin, discussed the economy broadly as well as growth, employment trends and inflation, the central bank said.
Powell’s “comments were consistent with his remarks at his congressional hearings last week,” the Fed said.
On Twitter, Trump said the meeting was “good & cordial.”
In separate meetings with panels on Capitol Hill last week, Powell said he felt that monetary policy was appropriate and likely to hold steady unless there are some significant changes in the economic outlook.
In addition, he said several times that Fed policy is not influenced by political considerations. That’s a key point, considering that Trump has been vocal in his criticism of the Powell Fed, saying that interest rate increases in 2018 were not necessary and
· North Korea said on Monday it was not interested in meaningless talks with the United States just so President Donald Trump had something to boast about and demanded an end to what it called a policy of hostility if the United States wanted dialogue.
· Oil prices fell more than 1% on Monday, erasing last week’s gains and tumbling alongside U.S. stocks on uncertainty over a trade deal between the United States and China.
Brent crude futures fell 95 cents, or 1.5%, to settle at $62.35. West Texas Intermediate (WTI) crude fell 67 cents, or 1.2%, to settle at $57.05.
Wall Street’s three main stock indexes also fell from last week’s record highs following a report that stoked concerns a U.S.-China trade deal might not get through, which pushed oil prices lower, analysts said.
· The United States on Monday effectively backed Israel’s right to build Jewish settlements in the occupied West Bank by abandoning its four-decade-old position that they were “inconsistent with international law,” a stance that may make Israeli-Palestinian peace even more elusive.
The announcement by Secretary of State Mike Pompeo was a victory for Israeli Prime Minister Benjamin Netanyahu, who is struggling to remain in power after two inconclusive Israeli elections this year, and a defeat for the Palestinians.
The European Union said on Monday that it continued to believe that Israeli settlement activity in occupied Palestinian territory was illegal under international law and eroded prospects for lasting peace.
· The European Union said on Monday that it continued to believe that Israeli settlement activity in occupied Palestinian territory was illegal under international law and eroded prospects for lasting peace.
Reference: CNBC, Reuters
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