· Tech wobble buoys dollar, Brexit fears hammer pound
The dollar was poised for its first back-to-back weekly gains since May on Friday as jitters in equity markets had investors sticking to safer assets, while sterling tracked toward its worst week since March on fears of a messy hard Brexit.
After a volatile New York session, the greenback was broadly steady in Asia. Marginal moves higher in the Aussie, kiwi and euro were all too small to dent a bounce in the dollar that came with Thursday’s Wall Street selloff.
Markets are also looking to U.S. consumer price data due at 1230 GMT for an insight into the recovery and to the challenge facing the Federal Reserve as it looks to lift inflation.
Against a basket of currencies, the dollar was a touch lower midway through Asian trade, but ahead by about half a percent for the week. It has now recouped about 1.7% from a 28-month hit low early in September.
The yen was broadly steady for the week at 106.14 per dollar. Goldman Sachs analysts said pension fund flows out of Japan had offset a safety bid as U.S. stocks fell.
Asia’s steady session followed wild trade in the wake of Thursday’s European Central Bank meeting and a falling out between Britain and Europe over Brexit that hammered the pound.
The euro whipsawed, first zooming 1% higher to $1.1917 after European Central Bank President Christine Lagarde insisted the bank does not target the exchange rate, before falling back to around $1.1830 as a U.S. equities slump lifted the dollar.
The European Union told Britain on Thursday it should urgently scrap a plan to break their divorce treaty.
But Britain has refused to budge and pressed ahead with a draft law that could sink four years of Brexit talks by fiddling with agreed-upon arrangements for Northern Ireland.
The outcry from Europe sent the pound to a six-week low of $1.2773 and it mostly stayed there on Friday, last trading at $1.2812. It has lost 3.5% on the dollar this week and about as much against the euro to sit at92.32 pence.
· Pelosi: 'Hopeful' COVID-19 aid bill can still pass before election
U.S. House Speaker Nancy Pelosi said she was hopeful legislation for additional COVID-19 relief could be finalized before the Nov. 3 presidential election no matter how the Republican-led Senate voted on a slimmed down version later on Thursday.
Pelosi, who controls the Democratic-led House of Representatives that passed a larger bill in May, told reporters at a news conference that novel coronavirus pandemic-related relief would not be in a separate measure to fund federal government agencies.
· Unwillingness to spend money is a disadvantage for the U.S. in its tech race with China, expert says
The United States’ unwillingness to spend money is its biggest disadvantage in a tech race with China, according to a cybersecurity and technology expert.
From imposing restrictions on telecommunications giant Huawei to issuing executive orders banning transactions with ByteDance, and forcing the company to sell the U.S. operations of the popular app TikTok, Washington has stepped up efforts to put pressure on China’s technology firms in recent years.
This month, the U.S. Department of Defense said it is in discussions over whether Semiconductor Manufacturing International Corporation, China’s largest chip manufacturer, should be subjected to export restrictions.
“The U.S.′ biggest disadvantage in this tech race is its unwillingness to spend money,” James Andrew Lewis, senior vice president and director of the Technology Policy Program at CSIS, said on CNBC’s “Squawk Box Asia” on Thursday.
· UK economy grew 6.6% in July as gradual recovery continues
The U.K. economy grew 6.6% in July on a monthly basis, according to initial estimates published Friday, as the economy seeks to recover from the sharp downturn caused by coronavirus-induced lockdown measures.
July’s estimated growth in GDP (gross domestic product) was broadly in line with expectations, with economists polled by Reuters expecting a monthly expansion of 6.7%, and follows growth of 8.7% in June and 2.4% in May, following a record 20% plunge in April.
Friday’s data from the Office for National Statistics (ONS) showed a decline of 11.7% compared to the same period last year, slightly below expectations of an 11.4% contraction.
· Alan Greenspan lists inflation and the budget deficit as his biggest concerns
Former Federal Reserve Chairman Alan Greenspan said his biggest economic concerns in the U.S. are inflation and the budget deficit.
“My overall view is that the inflation outlook is unfortunately negative and that’s essentially the result of entitlements crowding out private investment and productivity growth,” Greenspan said in an interview Thursday on CNBC’s “Squawk on the Street.”
It was the first televised interview the “Maestro” has given since the coronavirus pandemic hit in March.
· China's expanded export ban poses fresh challenge to global tech industry
The latest additions to China’s list of banned technology exports could upset a broad range of industries and raise the possibility that some global tech giants might have to split off their Chinese operations, legal experts said.
The new list of technologies banned from export announced on Aug. 28 came as an unwelcome surprise to an industry already grappling with the uncertainty posed by trade tensions between China and the United States.
The move was initially seen as a means of giving Beijing a say in any sale of video app TikTok, but advisers to Chinese and foreign firms say the potential consequences go much further.
· China, India agree to disengage troops on contested border
China and India said they had agreed to de-escalate renewed tensions on their contested Himalayan border and take steps to restore “peace and tranquillity” following a high-level diplomatic meeting in Moscow.
· Japan foreign minister says aims to reach broad agreement on UK trade deal Friday
Japanese Foreign Minister Toshimitsu Motegi said he plans to hold talks with British trade minister Liz Truss later on Friday to discuss a post-Brexit bilateral trade deal and hopes to reach a broad agreement.
“I will hold talks with minister Truss this afternoon...I would like to reach a broad agreement today, if possible,” Motegi told a regular news conference.
· South Korea sees uptick in COVID-19 cases as cluster infections continue
South Korea posted a slight uptick in the daily number of its coronavirus cases on Friday even as infections from a church and a political rally that sparked a second wave of outbreaks ease.
The Korea Center for Disease Control and Prevention (KCDC) reported 176 new cases as of midnight Thursday, which brought the total infections to 21,919, with 350 deaths.
A fresh wave of infections erupted at a church whose members attended a large protest in downtown Seoul last month have driven the daily tally to its peak in months at 441.
· Oil extends losses as stockpile rise amid weakening demand
Oil prices fell for a second day on Friday, pressured by a surprise rise in U.S. stockpiles as the coronavirus pandemic continues to erode demand for fuels.
Brent crude was down 18 cents, or 0.5%, at $39.88 a barrel by 0337 GMT, after falling nearly 2% on Thursday, while U.S. crude dropped 14 cents, or 0.4%, to $37.16 a barrel, having fallen 2% in the previous session.
Both major benchmarks are down around 6.5% for the week and headed for a second week of declines, as hopes dim for a steady recovery in fuel demand amid signs of second-wave coronavirus outbreaks.
In the United States, stockpiles rose last week, against expectations, as refineries slowly returned to operations after production sites were shut down due to storms in the Gulf of Mexico and wider region.
Reference: CNBC, Reuters
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