· Currencies made a muted response to the U.S.-China trade deal on Monday, as last week’s brief relief that an agreement had been reached was replaced by frustration at a lack of details, and a reluctance to make big bets as Christmas draws near.
“We’ve been a little but underwhelmed by the details of what we know now,” said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.
“The good news is that now we have more surety in terms of the prospect of an increase in tensions. The market needed that assurance. But in terms of the rollbacks they’re quite minimal.”
The trade-sensitive Australian dollar fetched $0.6878, easing from Friday’s four-month high of $0.6930.
The Chinese yuan traded at 6.9959 per U.S. dollar, still stronger than the symbolic 7 mark but below the four-month high of 6.9589 that it hit last week.
Both currencies found some support from slightly stronger-than-expected Chinese production and consumption data.
The euro rose marginally to $1.1129, as did the Japanese yen to 109.40 per dollar. Against a basket of currencies, the dollar weakened 0.1% to 97.084.
Elsewhere, sterling climbed back towards Friday’s peak, adding half a percent to $1.3386, basking in the glow of a Conservative election victory that British Prime Minister Boris Johnson called a “huge great stonking mandate.”
“The focus now turns to Brexit and the 31 January deadline, with the election results giving Prime Minister Johnson a clear mandate to pave the way out of Europe,” ANZ analysts said in a note.
· The “phase one” U.S.-China trade deal will nearly double U.S. exports to China over the next two years and is “totally done” despite the need for translation and revisions to its text, U.S. Trade Representative Robert Lighthizer said on Sunday.
Lighthizer, speaking on CBS’ “Face the Nation” program, said there would be some routine “scrubs” to the text but “this is totally done, absolutely.”
The deal, announced on Friday after more than two and a half years of on-and-off negotiations between Washington and Beijing, will reduce some U.S. tariffs on Chinese goods in exchange for increased Chinese purchases of U.S. agricultural, manufactured and energy products by some $200 billion over the next two years.
· U.S. President Donald Trump and Chinese officials have agreed to a “phase one” trade deal that includes cutting U.S. tariffs on Chinese goods.
Washington has agreed to suspend tariffs on $160 billion in Chinese goods due to go into effect on Dec. 15, Trump said, and cut existing tariffs to 7.5%.
The agreement covers intellectual property, technology transfer, agriculture, financial services, currency, and foreign exchange, according to Washington’s Trade Representative.
Neither side offered specific details on the amount of U.S. agricultural goods Beijing had agreed to buy - a key sticking point of the lengthy deal negotiations. News of the trade deal saw U.S. stocks romp to fresh record levels. But few doubt that the rollercoaster is over yet.
While Trump announced that “phase two” trade talks would start immediately, Beijing made it clear that moving to the next stage of the trade negotiations would depend on implementing phase one first. While markets cheered the December rally, few expect the trade deal rollercoaster ride to be quite over yet.
· A thumping election win for Prime Minister Boris Johnson has raised hopes that 3-1/2 years of Brexit-fuelled chaos will finally end.
Expectations that he may swing slightly nearer the centre of his Conservative Party, sidelining the fiercest eurosceptics, and ease the path towards a free-trade deal with the European Union have sent sterling and British shares surging.
Yet there are signs of caution, with sterling stalling around $1.35. Further gains will hinge on Johnson’s new cabinet, how the global growth and trade war backdrop pans out and what the Bank of England might do.
At the central bank’s Dec. 19 meeting, markets will watch for any shifts in its views on inflation, the UK economy and the interest rate outlook for 2020. While policymakers have skewed dovish of late amid a torrent of dismal data and sub-target inflation, the election result - and a hoped-for growth recovery - have seen money markets halve the probability of an end-2020 cut to 25%.
Without more clarity, investors might just be wary of chasing sterling much higher.
· Senior Japanese and South Korean trade officials met on Monday for the first time since Japan imposed controls on exports to its neighbor of high-technology materials, plunging testy relations between the U.S. allies into a new crisis.
Japan imposed the curbs on exports to South Korea of three materials used to make semiconductors in July, threatening a pillar of the South Korean economy and the global supply chain of chips.
Japan cited its concern about insufficient South Korean controls on the materials, suggesting they might have been shipped to North Korea, although the curbs came as relations soured over a dispute over Japan’s wartime actions.
· Chinese Premier Li Keqiang met with Hong Kong leader Carrie Lam in Beijing on Monday, saying the Asian financial hub was not yet out of the “dilemma” facing the city’s economy after months of sometimes violent protests.
Li met with Lam during a regular duty visit where she is also due to hold a potentially pivotal meeting with President Xi Jinping.
The meetings come after Hong Kong police fired tear gas in late night street clashes with anti-government protesters on Sunday as the former British colony’s worst political crisis in decades drags on into a seventh month.
· China is poised to take the lead in blockchain after it was given strong backing by the country’s leader President Xi Jinping, experts told CNBC. The move could allow the world’s second-largest economy to control the development of the nascent technology in the absence of competition from other regions like Europe and the U.S.
“This is an extremely significant development, not just for China but for the broader world,” Garrick Hileman, head of research at cryptocurrency exchange and trading platform Blockchain.
“Countries are racing to identify strategic technologies and develop sustainable competitive advantages in areas like artificial intelligence and robotics. With Xi’s speech blockchain technology can now be added to this list,” Hileman told CNBC.
· Oil prices on Monday slid off near three-month highs hit last week as investors searched for clarity beyond the initial impact of a trade deal between the United States and China that’s expected to boost flows between the top two global economies.
Brent crude oil futures LCOc1 fell 10 cents, or 0.2% to $65.12 a barrel by 0729 GMT, while West Texas Intermediate crude CLc1 was down 10 cents or 0.2% to $59.97 a barrel.
Reference: Reuters, CNBC
Thai
Eng