· The dollar began the week on a firm note on Monday as economic data pointed to strength right across the U.S. economy, while optimism on the outlook for China supported Asian currencies.
The greenback held steady near a one-week high against the euro EUR=, at $1.1095, and just below an eight-month peak on the Japanese yen, at 110.17 yen per dollar JPY=. Against a basket of currencies it was flat .DXY.
China’s yuan edged 0.2% higher to a fresh six-month top, while the Australian and New Zealand dollars also edged ahead.
Moves were slight and volumes thin as Chinese New Year approaches in Asia and with U.S markets closed for Martin Luther King day on Monday.
Futures pricing suggests nobody thinks the U.S. Federal Reserve will cut rates when it meets at the end of the month. FEDWATCH
“We’re seeing consistently strong data, still, from the United States, and that’s on the back of a boost that it will probably get from this U.S.-China trade agreement,” said Jeffrey Halley, senior market analyst for Asia Pacific at broker OANDA.
“I think the U.S. dollar will continue to outperform against the major currencies,” he said, adding he counted the chance of a Fed rate cut soon at zero. “I think the bar for a rate cut is quite high at the moment.”
· Former White House chief economic advisor Gary Cohn said Sunday that President Donald Trump’s tariffs hurt the U.S. economy and undermined the stimulative impact of the administration’s massive tax cut passed in 2017.
Cohn, in an interview with CBS’ Face The Nation, said Trump’s steel and aluminum tariffs “collided” with his tax policy by undermining a provision that allowed companies to write off their capital expenditures.
“I think it’s totally hurt the United States,” Cohn said, referencing the tariffs. ”[...]We’re missing a big component. We’re missing the capital expenditures from companies in the United States.“
· President Donald Trump sought on Sunday to assure American farmers and ranchers hit by a protracted tariff war with China that a trade agreement he signed with Beijing will lead to major purchases of U.S. agricultural products.
· There’s a 50% chance the U.S.-China “phase one” trade deal could survive its first year — but that probability falls to 25% in the second year, a business consultant said on Monday.
Richard Martin, managing director at management consulting firm IMA Asia, said there are two reasons why the agreement could fall apart within those time frames: Limited success stories of government-mandated trade in the past, and provisions that allow the U.S. and China to walk away from their deal.
Martin added that if there are disputes between the two sides, the deal allows the U.S. Trade Representative, currently Robert Lighthizer, to “pretty much determine when China’s breaking the rules and inflict any penalty he wants.” In return, China could walk away from the agreement, he explained.
· The Danske Bank Research Team highlights key macroeconomic events of note in the week ahead, with the central bank likely to hog the limelight.
Key Quotes:
“Central banks will take centre stage this week with the meetings at Norges Bank and the ECB (both Thursday) and Bank of Japan (Tuesday
We will also get more news on the pace of the global recovery with the release of flash PMIs for the euro area, the US, Japan and the UK (all Friday).
Equity markets will continue to focus on the earnings season, which is off to an encouraging start.
· China has revised up its economic growth by 0.1 percentage points each year between 2014 and 2018, the National Bureau of Statistics said, making it easier for Beijing to fulfill its goal of doubling the size of the economy by 2020 from 2010.
Annual gross domestic product (GDP) growth for 2014-2018 has been raised to 7.4%, 7.0%, 6.8%, 6.9% and 6.7% from 7.3%, 6.9%, 6.7%, 6.8% and 6.6% previously, the latest data from the statistical bureau showed on Saturday.
Based on the revised figures, real GDP growth of at least 5.6% in 2020 would be enough for achieving Beijing’s target to double GDP in the decade to 2020, according to Reuters calculations, in line with analysts’ estimates.
· Iran still remains in its 2015 nuclear deal despite rolling back its commitments to the pact, Foreign Ministry spokesman Abbas Mousavi said on Monday, criticizing European powers for failing to salvage the agreement.
“Tehran still remains in the deal ... the European powers’ claims about Iran violating the deal are unfounded,” he told a televised weekly news conference.
· WTI Price Analysis: Back below 200-hour MA
West Texas Intermediate (WTI) is currently trading at least 20 cents below the 200-hour moving average (MA) at $59.28, having hit a session high of $59.61 an hour ago.
The failure to hold above the key average will likely allow a drop to Friday's close of $58.77.
That would fill the gap created by today's higher open at $59.32. The black gold gapped higher in Asia as major OPEC producers Iraq and Libya halted production on Sunday on rising tension in the Middle East.
If the support at $58.77 holds, the bullish cross of the 50- and 100-hour averages would gain credence and a bounce to $60 could be seen.
On the flip side, a move through $58.77 support will likely expose the higher low of $58.25 created on Friday. A violation there would mark an end of the corrective bounce from the Jan. 15 low of $57.35.
· Oil prices rose to their highest in more than week on Monday after two large crude production bases in Libya began shutting down amid a military blockade, setting the stage for crude flows from the OPEC member to be cut to a trickle.
Brent crude LCOc1 futures were up by 70 cents, or 1.11%, to $65.55 by 0731 GMT, having earlier reached $66 a barrel, the highest since Jan. 9. The West Texas Intermediate CLc1 contract was up by 56 cents, or 1%, at $59.10 a barrel, after rising to $59.73, the highest since Jan. 10.
In the latest development in a long-running conflict in Libya, where two rival factions have claimed the right to rule the country for more than five years, the National Oil Corporation (NOC) on Sunday said two big oilfields in the southwest had begun shutting down after forces loyal to the Libyan National Army closed a pipeline.
Reference: Reuters, CNBC, FXStreet
Thai
Eng