· The dollar jumped against the safe-haven Japanese yen on Thursday after U.S. President Donald Trump said the United States was “very close” to nailing down a trade deal with China, just days before new U.S. tariffs on Chinese imports were due to be imposed.
“Getting VERY close to a BIG DEAL with China,” Trump posted on Twitter.
Against the Japanese yen, which tends to draw investors during times of geopolitical or financial stress as Japan is the worlds biggest creditor nation, the dollar rose 0.55% to 109.14, a near one-week high.
The dollar was also supported by a Wall Street Journal report which said U.S. negotiators have offered to slash existing tariffs by as much as half on $360 billion of Chinese-made goods and cancel the new round of levies slated to take effect Sunday.
The dollar index, which measures the greenback against six major currencies, was up 0.39% at 97.46.
· US reaches a phase one trade deal with China in principle pending Trump’s approval
The Trump administration has reached a phase one trade deal with China in principle, pending approval from President Donald Trump, three sources close to talks told CNBC on Thursday.
Trump met with top advisors on Thursday about trade with China and whether to delay the next round of U.S. tariffs. Duties of 15%, set to take effect Sunday, would affect about $160 billion in Chinese-made goods including toys, computers, phones and clothing.
The White House has offered to scrap those duties and slash some existing tariffs in half, two sources told CNBC. The U.S. proposed cutting existing duties on $360 billion in Chinese products by 50%.
On Thursday morning, Trump signaled optimism about an agreement with China. He tweeted that the U.S. has moved close to a trade deal with Beijing after several false starts and near misses.
“Getting VERY close to a BIG DEAL with China. They want it, and so do we!” the president wrote.
· U.S., China agree to reduce tariffs, delay duties scheduled for Dec. 15: source
The White House has agreed to suspend some tariffs on Chinese goods and reduce others in return for Beijing’s pledge to hike purchases of U.S. farm products in 2020, sources said on Thursday, taking a step towards de-escalating the trade war between the world’s two biggest economies.
A sourced briefed on the status of bilateral negotiations said the United States would suspend tariffs on $160 billion in Chinese goods expected to go into effect on Dec. 15 and roll back existing tariffs.
In return, Beijing would agree to buy $50 billion in U.S. agricultural goods in 2020, double what it bought in 2017, before the trade conflict started, two U.S.-based sources briefed on the talks said.
The White House didn’t release any official statement, raising questions about whether the terms had been agreed by both sides.
· The European Central Bank (ECB) kept its rates unchanged on Thursday following new President Christine Lagarde’s first monetary policy meeting in Frankfurt.
The Governing Council voted to keep the main deposit rate at the historic low of -0.5%, in line with market expectations, while the marginal lending facility remained at 0.25%.
The ECB’s statement reiterated that rates will stay at the current level or lower until the central bank has seen the inflation outlook “robustly converge” to a level close to but below 0.2% and that underlying inflation has remained consistently convergent with that level.
It also confirmed that net asset purchases had started in November at a monthly rate of 20 billion euros ($22.3 billion) and that this will continue to run “as long as necessary” to reinforce the accommodative policy stance.
The euro traded roughly flat against the dollar at $1.1132 following the announcement awhile equity markets turned slightly negative after marginal early gains.
The ECB forecast annual real GDP growth for the euro area at 1.2% in 2019, 1.1% in 2020 and 1.4% in 2021 and 2022, an upward revision of 0.1% for 2019 and a downward shift of 0.1% for 2020 compared with September’s projections.
Lagarde suggested that the growth slowdown was stabilizing but that incoming data since October’s policy meeting “pointed to continued muted inflation pressures and weak euro area growth dynamics.”
“The risks to the euro area growth outlook relating to geopolitical factors, rising protectionism and vulnerabilities in emerging markets remain tilted to the downside, but have become somewhat less pronounced,” she added.
Inflation was revised up by 0.1% for 2020 but down by 0.1% to 1.4% for 2021, with 2022 forecast at 1.6%.
“In our 2022 forecast for inflation, while the entire year is forecast at 1.6%, the fourth quarter is at 1.7%, so directionally it is slightly increasing across the course of 2022,” Lagarde said in her first press conference at the ECB’s helm.
· U.K. Prime Minister Boris Johnson is set to remain in power with an exit poll showing his Conservative Party winning a clear majority of parliamentary seats in a general election on Thursday.
The exit poll by Ipsos Mori — commissioned by Sky News, the BBC and ITV — was released soon after voting stations around the U.K. closed at 10 p.m. London time. It’s a survey of thousands of voters which has been reliably accurate in recent years.
The poll projected that the Conservatives would win 368 seats in Parliament, a gain of 50 seats from the 2017 election. The U.K. pound quickly jumped more than 2% on the news.
A party usually needs more than 320 seats to have a majority in the House of Commons in order to pass bills. The opposition Labour party was predicted to lose 71 seats with a figure of 191. The centrist Liberal Democrats were predicted to get 13 seats, the Brexit Party none and the Scottish National Party 55 seats.
The result of the election will have a decisive effect on the direction that Brexit takes, three-and-a-half years since the U.K.’s referendum on EU membership.
- ‘Get Brexit done’
Johnson had promised the public that a vote for his Conservative Party would “get Brexit done.” The main opposition party, Labour, had pledged to renegotiate a Brexit deal with the EU and to then put this to a public vote. The Liberal Democrats had vowed to cancel Brexit altogether.
· The U.K. pound jumped more than 2% after an exit poll projected an 86-seat majority for the Conservative Party in the U.K. general election.
Shortly after 10 p.m. London time, a survey of thousands of people who had just left the voting booth indicated that the Conservatives were on course to gain around 50 seats, ensuring a healthy majority.
In reaction the pound rose to $1.3451, more than 2% higher than before the poll was announced, and touched its highest level against the greenback since June 2018. Sterling also jumped against the euro, up 1.4% to 83.265 pence.
· Oil prices rose nearly 1% on Thursday after U.S. President Donald Trump said Washington was “very close” to nailing down a trade deal with China.
Brent crude futures rose 67 cents, or 1%, to $64.39 a barrel. West Texas Intermediate crude futures gained 42 cents, or 0.7%, to settle at $59.18 a barrel.
Oil prices received a fresh boost after Trump’s tweet saying the United States was very close to a big deal with China amid reports that the country was considering a delay or possible cancellation of tariffs scheduled to go into effect on Dec. 15.
While prices received a fresh boost immediately following the tweet, futures eased somewhat during the session.
The outlook for oil demand has been clouded by U.S.-China trade tensions and uncertainty over whether a fresh round of U.S. tariffs on Chinese goods would come into effect.
Reference: CNBC, BBC, Reuters
Thai
Eng