Market Review - 06/11/2019 23:42GMT
Dollar ends mixed on possible delay in U.S.-China trade deal
The greenback pared intra-day losses made in Asia and Europe and ended mixed on Wednesday in risk-off trading after Reuters reported that that trade deal between United States and China could be delayed until December.
Reuters then reported a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign a long-awaited interim trade deal could be delayed until December as discussions continue over terms and venue, a senior official of the Trump administration told Reuters on Wednesday. The official, who spoke on condition of anonymity, said it was still possible the "Phase One" agreement aimed at ending a damaging trade war would not be reached, but a deal was more likely than not.
Versus the Japanese yen, dollar remained on the back foot in Asia and fell to 109.01 in Asian morning, then to 108.92 in European morning on pullback in U.S. Treasury yields before rebounding to 109.13 in New York. However, renewed selling there knocked price down to session lows at 108.83 on renewed U.S.-China trade concern.
The single currency found renewed buying at 1.1067 at Asian open and traded above Tuesday's low at 1.1064 and then gained to 1.1080. Despite retreating to 1.1070, the pair rose to an intra-day high at 1.1093 in Europe on upbeat euro zone PMI data before falling to session lows at 1.1065 in New York afternoon on possible delay in U.S.-China trade deal.
Reuters reported Germany's services sector barely grew in October, a survey showed on Wednesday, in a further sign that a protracted recession in manufacturing is spilling over to other sectors and hurting Europe's largest economy. IHS Markit's final services Purchasing Managers' Index (PMI) edged up to 51.6 from 51.4 the previous month. That was a bit better than a preliminary reading published last month, but it still marked one of the weakest performances in the past six years. Also, euro zone business activity expanded slightly faster than expected last month but remained close to stagnation, according to a survey whose forward-looking indicators suggest what little growth there is could dissipate.
Wednesday's downbeat survey of private sector businesses comes soon after the European Central Bank reignited its 2.6 trillion euro bond-buying programme to try and stimulate inflation and growth. IHS Markit's final euro zone composite Purchasing Managers' Index (PMI), seen as a good gauge of economic health, rose to 50.6 from September's more than six-year low of 50.1 and above a preliminary estimate of 50.2.
Although the British pound dipped to 1.2870 at Asian open and then rebounded in tandem with euro to 1.2895 in European morning, then to +1.2897+ in New York morning, renewed selling emerged and knocked price down to session lows at 1.2845 in New York afternoon as a poll for Sky news showed a decrease in support for the UK Conservative Party together with negative U.S.-China trade news.
Reuters reported support for British Prime Minister Boris Johnson's Conservative party has dipped slightly in the last few days, according to a YouGov poll on Wednesday, as the formal launch of his general election campaign was marred by gaffes and a resignation. The poll for Sky News showed support for the Conservatives down 2 percentage points at 36%, with Labour unchanged at 25%. Data for the poll was taken as Johnson's campaign launch was overshadowed by the resignation of one of his ministers, a gaffe about the victims of a deadly tower blaze and a doctored video of an opponent released by his party. The Liberal Democrats were one point up at 17% and the Brexit Party was unchanged at 11%.
The poll of 1,667 people was conducted between Nov. 5-6 and compares with the previous survey done between Nov. 1 and Nov 4. The election is on Dec. 12.
On the data front, Reuters reported American workers were unexpectedly less productive during the third quarter, with growth in their output failing to keep up with hours worked. The Labor Department said on Wednesday nonfarm productivity, which measures hourly output per worker, fell at a 0.3% annualized rate between July and September, the biggest decline in almost four years. The last drop that was sharper was in the fourth quarter of 2015.
The decline might set back the prospects of a pick-up expected by some economists in the trend growth rate for productivity following 2017 tax law changes partially aimed at fostering investment. Analysts had expected productivity growth of 0.9% during the quarter.
Data to be released on Thursday :
Australia AIG construction index, trade balance, imports, exports, Germany industrial production, UK Halifax house prices, BOE MPC vote hike, BOE MPC vote unchanged, BOE MPC vote cut, BOE QE total, BOE QE corporate bond purchases, Italy retail sales, and U.S. initial jobless claims.
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