Dollar climbs broadly on US/China trade optimism

Market Review - 19/01/2019  03:45GMT  

Dollar climbs broadly on US/China trade optimism

The greenback ended the day higher across the board on Friday on improved risk appetite due to renewed market optimism surrounding trade talks between U.S. and China.  
  
China has offered to go on a six-year buying spree to ramp up imports from the United States in order to reconfigure the relation between the two countries, Bloomberg reported on Friday, citing people familiar with the matter.  
  
By raising annual goods imports from the U.S. by a combined value of more than $1 trillion, China would seek to reduce its trade surplus, which last year stood at $323 billion, to zero by 2024, one of the people told Bloomberg.  
  
Versus the Japanese yen, price briefly dropped to 109.06 ahead of Tokyo due to bargain hunting by Japanese importers after hitting a fresh 2-week high in Thursday 's trading, however, renewed buying interest emerged as rise in Asian equites boosted risk appetite and pushed price to 109.60 in European morning. Dollar continued intra-day gain and later climbed to a fresh 2-week high of 109.88 in New York on broad-based strength in the usd due to market optimism U.S.-China trade talks.  
  
Reuters earler reported earlier U.S. Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30, the Wall Street Journal reported on Thursday, citing people familiar with the internal deliberations.  
  
But Trade Representative Robert Lighthizer has resisted the idea, and the proposal had not yet been introduced to President Donald Trump, according to the Journal.  
  
Reuters later reported China has offered to go on a six-year buying spree to ramp up imports from the United States in order to reconfigure the relation between the two countries, Bloomberg reported on Friday, citing people familiar with the matter.  
  
By raising annual goods imports from the U.S. by a combined value of more than $1 trillion, China would seek to reduce its trade surplus, which last year stood at $323 billion, to zero by 2024, one of the people told Bloomberg.  
  
Although the single currency traded sideways and briefly dipped to 1.1387 in Asia, price rebounded to session highs at 1.1411 (Reuters) in Europe on cross-buying of euro especially vs sterling. However, the pair erased its gains and later tumbled in New York on usd's broad-based strength to a near 2-week trough of 1.1353 in New York morning before staging a recovery.  
  
The British pound took a breather after Thursday's rally to a 2-month high at 1.3001 and retreated to 1.2966 at Asian open. Price remain on the back foot in European morning and weakened to 1.2927 due partly to release of weak U.K. retail sales data before recovering. However, cable met renewed selling at 1.2962 in Europe and later dropped in tandem with euro to session lows at 1.2858 near New York close.  
  
Retail sales fell 0.9% in December, and were up only 3.0% from a year earlier, the Office for National Statistics said on Friday. Economists had forecast a 0.8% decline for the month and a 3.6% gain year-on-year.  
  
The monthly increase in November was also revised down to 1.3% from an initial estimate of 1.4%, while the annual increase was revised down to 3.4% from an initial 3.6% advance.  
  
In other news, Reuters reported the U.S. economy is "doing really well" overall, Philadelphia Federal Reserve Bank president Patrick Harker said on Friday, in a speech that was long on a Fed program aimed at promoting economic mobility and short on broader economic or monetary policy themes.  
  
"The reality of the tight labor market means that employers have to start thinking creatively and long term about how they're going to address the gaps in their workforces," Harker said in remarks prepared for delivery in Philadelphia. The Philadelphia Fed's Economic Growth n Mobility Project, he said, works with local community groups and businesses to develop job training and transit options.  
  
On the data front, U.S. consumer optimism waned in January, hitting its lowest level since President Donald Trump was elected, as a host of factors, including the partial government shutdown, weighed on sentiment. The preliminary publication of the data for January from the University of Michigan's Consumer Survey Center showed that consumer sentiment decreased to 90.7 from 98.3 a month earlier. Economists had forecast a drop to 97.  
  
Data to be released this week :  
  
Japan Nikkei manufacturing PMI, China industrial output, retail sales, GDP, Germany producer prices and U.S. market holiday on Monday.  
  
UK claimant count, ILO unemployment rate, employment change, average weekly earnings, PSNB, PSNCR, Germany ZEW economic sentiment, ZEW current conditions, EU ZEQ economic sentiment, Canada manufacturing sales, wholesale sales, and U.S. existing home sales on Tuesday.  
  
New Zealand CPI, Australia Westpac leading index, Japan exports, imports, trade balance, BoJ interest rate decision, all industrial activity index, France business climate, UK CBI trends survey, Canada retail sales, U.S. MBA mortgage application, redbook, monthly home price, Richmond Fed manufacturing index, and EU consumer confidence on Wednesday.  
  
Australia manufacturing PMI, services PMI, employment change, unemployment rate, Japan coincident index, leading economic index, France Markit manufacturing PMI, Markit services PMI, Germany Markit manufacturing PMI, Markit services PMI, Italy trade balance, EU Markit manufacturing PMI, Markit services PMI, ECB interest rate decision, ECB deposit rate decision, and U.S. initial jobless claims, Markit manufacturing PMI, Markit services PMI, leading indicator on Thursday.  
  
Japan Tokyo CPI, Germany Ifo business climate, Ifo current conditions, Ifo expectations, UK BBA mortgage approvals, CBI distributive trades, Canada budget balance, and U.S. Federal budget on Friday.