· The dollar shook off early weakness to creep higher against other major currencies on Thursday, with investors focussed on the latest developments in a bitter 16-month long trade dispute between the United States and China that has weighed on the world economy.
Risk sentiment seesawed on Thursday amid mixed signals on whether Washington and Beijing can work out at least a partial deal to end trade-related tensions between the world’s two largest economies.
The dollar index, which compares the dollar against six major currencies, was up 0.07% at 97.999.
Investors, who in recent weeks had grown optimistic about the possibility of a deal, were unnerved by a hardening of the trade war rhetoric from both sides in recent days.
· On Thursday a report in the South China Morning Post said the United States could delay tariffs on Chinese imports even if a deal has not been reached by Dec. 15, when tariffs kick in on goods including electronics and Christmas decorations.
Separately, Chinese Vice Premier Liu He, also the chief trade negotiator, said he was “cautiously optimistic” on a phase one deal, according to a report by Bloomberg.
· Expectations are rising for a first-stage trade agreement between China and the U.S., despite no clarity on when leaders of the two countries can meet to seal a deal.
“China is willing, on the basis of equal and mutual respect with the U.S., to work together to properly settle areas of common concern and strive for a phase-one trade agreement,” Gao Feng, China’s Ministry of Commerce spokesman, said at a regular press conference Thursday, according to CNBC’s translation of his Mandarin-language remarks.
Gao also said “external rumors” about the trade talks are not accurate, and noted the two trade delegations remain in close communication.
· China resolutely opposes U.S. lawmakers’ passing of a Hong Kong human rights bill and will never allow anyone to destroy Hong Kong’s prosperity and stability, senior Chinese diplomat Wang Yi said on Thursday.
China’s foreign ministry said in a statement that Wang, China’s state councillor, told former U.S. Secretary of Defense William Cohen during a meeting in Beijing that China will never allow anyone to undermine its “one country two systems” principle.
· President Donald Trump signed legislation on Thursday that will extend funding for a wide range of federal agencies through Dec. 20 and avoid partial government shutdowns that otherwise would have begun on Friday.
An administration official said Trump signed the bill that was approved by the Republican-led Senate earlier on Thursday by a vote of 74-20. The Democratic-led House of Representatives passed the measure on Tuesday by a vote of 231-192, with all but a dozen Republicans voting against the funding.
Between now and Dec. 20, House and Senate negotiators will seek agreement on how to divvy up money across all of the federal bureaucracy. They are hoping to come up with legislation to keep the government operating through Sept. 30, 2020, the end of this fiscal year.
But their work, already arduous, could be further complicated by the highly charged impeachment investigation against Trump that Democrats are running in the House.
· House Democrats and the Trump administration did not come to an agreement on moving forward with President Donald Trump’s new North American trade deal during a meeting Thursday.
Lawmakers and the White House have worked for weeks to resolve Democratic concerns about enforcement tools for labor and environmental standards under the deal, known as the United States-Mexico-Canada Agreement. Leaving a meeting with House Speaker Nancy Pelosi and U.S. Trade Representative Robert Lighthizer, House Ways and Means Committee Chairman Richard Neal said the sides made progress but did not strike a final agreement, his office confirmed.
· Oil prices rose more than 2% on Thursday following a Reuters report that OPEC and its allies are likely to extend output cuts until mid-2020, while fresh signs emerged that China had invited U.S. trade negotiators for a new round of talks.
Brent crude futures gained $1.57, or 2.5%, to settle at $63.97 a barrel, while West Texas Intermediate crude futures surged to a two-month high, gaining 2.8% to settle at $58.58, according to Dow Jones.
To support oil prices, the Organization of the Petroleum Exporting Countries and its allies are likely to extend output cuts to June when they meet next month, according to OPEC sources.
OPEC meets on Dec. 5 at its headquarters in Vienna, followed by talks with a group of other oil producers, lead by Russia, known as OPEC+. The current supply cuts deal runs through to March 2020.
The sources told Reuters that formally announcing deeper cuts looked unlikely for now although a message about better compliance with existing curbs could be sent to the market.
Reference: CNBC, Reuters
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