· The dollar scaled an eight-month high against the yen on Friday after upbeat U.S. retail sales and jobs data, while the yuan got a lift after China’s economic data brightened the mood already cheered by a Sino-U.S. trade deal.
The dollar rose to as high as 110.305 yen, its strongest since late May in 2019, extending its rally from 107.65, a three-month low touched on Wednesday last week.
The dollar index, which tracks the greenback’s strength against a basket of six major currencies, was little changed at 97.322, as other major currencies barely moved.
The euro stood flat at $1.1133 while the British pound was also little changed at $1.3035.
The Chinese yuan edged up, hitting a six-month high of 6.8660 to the dollar in onshore trade, after a batch of Chinese economic data pointed to some stabilisation in the world’s second-largest economy.
· “There were rebounds in some areas, such as fixed income investments and industrial output, which is in line with other signs that China’s deceleration is coming to an end,” said Masashi Hashimoto, senior currency analyst at MUFG Bank in Tokyo.
“Markets seem to be reacting more positively than we have estimated to the deal, as China and the U.S. at least appear to have stopped slapping tariffs on each other even though whether they can reach a Phase 2 deal is unclear. We might consider revising up our yuan forecast a bit,” he said.
· China will likely do its part to uphold commitments in the “phase one” trade deal with the U.S., according to a report by London-based consultancy TS Lombard.
“Beijing is invested in the deal insofar as it helps the leadership’s drive to stabilize the economy and boost market confidence; at the same time, it is hoping for further tariff rollbacks in due course,” Eleanor Olcott, China policy analyst at the firm, wrote in a Thursday report.
In particular, Olcott said China “is willing and able to stick to” boosting imports from the U.S. and keeping the Chinese yuan stable. She added that this will ensure the deal holds until the U.S. presidential election in November.
· China's economy grew 6.1% in 2019, according to GDP figures released Friday. While that's in line with expectations, it's also the country's weakest growth in nearly three decades.
The country also reported that GDP grew 6% in the fourth quarter. The world's second largest economy is contending with rising debt, cooling domestic demand and fallout from the trade war with the United States.
The Chinese government targeted a range of 6% to 6.5% growth for 2019. Officials went into Friday's announcement, though, with one big issue behind them: Beijing this week signed a "phase one" trade deal with the United States. That should lessen tensions — at least in the short term.
· China will maintain a proactive fiscal policy and a prudent monetary policy in 2020 and roll out more support measures this year as the economy faces downward pressure, the chief of the country’s statistics bureau said on Friday.
· China's value-added industrial output, an important economic indicator, expanded 5.7 percent year on year in 2019, slowing from 6.2 percent growth in 2018, official data showed Friday.
The growth rate was higher than that in the first 11 months of 2019, according to the National Bureau of Statistics (NBS).
In December alone, China's industrial output expanded 6.9 percent year on year, up 0.7 percentage points from November.
· South Korea’s central bank kept its benchmark rate steady on Friday, as largely expected, as it assesses the impact of earlier easings amid concerns that rock-bottom interest rates meant to power a recovery could be stoking a property bubble.
The Bank of Korea’s policy board held the base rate steady at 1.25%, as predicted by all 33 analysts surveyed by Reuters, standing pat for a second meeting following two reductions in July and October last year.
· Negotiations on an investment agreement between the European Union and China are progressing and have entered a “critical stage” after six years of talks, a senior EU official said on Friday.
Progress in being achieved “month after month,” in a deal in which the EU is seeking more market access for European businesses in China, Nicolas Chapuis, EU ambassador to China, said in a news briefing in Beijing.
· Oil prices were steady on Friday as reports of sluggish economic growth in China, the world’s biggest crude importer, raised concerns about fuel demand and countered optimism from the signing of the Sino-U.S. trade deal earlier in the week.
Brent crude futures LCOc1 inched down 4 cents to $64.58 by 0615 GMT, after gaining nearly 1% on Thursday. The contract was down 0.6% for the week, on track for a second weekly fall.
U.S. West Texas Intermediate futures CLc1 slipped 7 cents at $58.45 a barrel, having risen more than 1% in the previous session. The contract was down about 1% for the week and also set for a second weekly decline.
· WTI Price Analysis: 50-day SMA guards immediate upside
WTI trades around $58.50 during the early Friday. In doing so, the oil benchmark fails to cross 50-day SMA despite taking a U-turn from 200-day SMA, also trading successfully beyond 50% Fibonacci retracement of the October-January upside.
Hence, traders will keep eyes on the black gold’s momentum either during its rise beyond a 50-day SMA level of $59.00 or on the downside break of 200-day SMA surrounding $57.70.
The 61.8% and 38.2% Fibonacci retracements, around $56.65 and $60.10 will be on the traders’ radar during the breaks.
If at all prices manage to remain strong beyond $60.10, the return of $62.50 can’t be denied.
On the flip side, oil price declines below $56.65 can fetch the quote to November 2019 bottom surrounding $54.90.
Reference: Reuters, CNBC, FXStreet, CNN
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