Market Review - 13/08/2019 23:44GMT
Dollar rallies in NY after U.S. makes trade concessions to China
The greenback erased initial losses made in Asia and European session and rallied in New York session on Tuesday as trade concerns between U.S. and China eased after the U.S. said it would delay 10% tariffs on some Chinese products, which were scheduled to begin next month.
Reuters reported the Trump administration will delay 10% tariffs on certain Chinese products, including laptops and cell phones, that had been scheduled to start next month, the Office of the U.S. Trade Representative said on Tuesday. Other products whose tariffs will be delayed until Dec. 15 include "computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing," the USTR said in a statement. A separate group of products will also be exempt altogether "based on health, safety, national security and other factors," it added.
Reuters reported U.S. consumer prices rose broadly in July, but the increase in inflation will likely do little to change expectations that the Federal Reserve will cut interest rates again next month amid worsening trade tensions. The Labor Department said on Tuesday its consumer price index increased 0.3% last month, lifted by gains in the cost of energy products and a range of other goods. The CPI had edged up 0.1% for two straight months. In the 12 months through July, the CPI increased 1.8% after advancing 1.6% in June.
Economists polled by Reuters had forecast the CPI would accelerate 0.3% in July and rise 1.7% on a year-on-year basis.
Versus the Japanese yen, although dollar gained to 105.58 in Asia, price dropped to session lows at 105.07 in European morning. However, the pair then rallied in New York morning on positive U.S.-China trade news and surged to an intra-day high at 106.97 in New York due partly to rising U.S. yields and stocks before retreating on profit-taking.
The single currency went through a roller-coaster ride. Euro initially retreated to 1.1183 in Asian morning before rising to an intra-day high at 1.1228 at New York open. However, price erased its gains shortly after and dropped to session lows at 1.1171 on dollar's broad-based strength before moving broadly sideways.
The British pound remained under pressure in Asia and fell to session lows at 1.2042 in early European morning. However, price erased its losses and gained to an intra-day high at 1.2097 at New York open due to upbeat UK wage data before retreating 1.2050 on usd's strength and then moved narrowly.
Reuters reported Britain's labour market showed unexpected strength in the second quarter, in sharp contrast with last week's figures showing economic contraction over the same period as the country gears up for Brexit. Total earnings growth, including bonuses, rose by an annual 3.7% in the three months to June, official data showed, the highest rate since June 2008 and rising from 3.5% in May, and in-line with forecasts in a Reuters poll of economists.
Excluding bonuses, pay growth picked up to 3.9% from 3.6%, the Office for National Statistics said, compared with the poll forecast for growth of 3.8%.
In other news, Reuters reported U.S. President Donald Trump on Tuesday cited China for not following through with expected large purchases of U.S. agricultural products but appeared hopeful that Beijing's stance could change. "As usual, China said they were going to be buying 'big' from our great American Farmers. So far they have not done what they said. Maybe this will be different!" Trump tweeted. His comments come after his administration delayed a 10% tariff on certain Chinese imports, including technology products and clothing, until mid-December.
Data to be released on Wednesday:
Japan machinery orders, Australia consumer sentiment, wage price index, China industrial output, retail sales, France ILO unemployment rate, CPI flash, CPI, Germany GDP flash, UK core CPI, CPI, RPI, core RPI, PPI input prices, PPI output prices, PPI core output, EU employment change, GDP, industrial production and U.S. MBA mortgage application, import prices, export prices.
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