Dollar trades mixed as Trump offers little detail on US-China trade war

Market Review - 12/11/2019  23:45GMT  

Dollar trades mixed as Trump offers little detail on US-China trade war

The greenback traded mixed against its peers on Tuesday as U.S. President Trump refused to offer new details on the on-going trade war with China but took another dig at the Federal Reserve during his speech a the Economic Club of New York. Falling U.S. yields triggered broad-based buying in the safe-haven jpy.  
  
Reuters reported President Donald Trump on Tuesday said the United States is close to signing a "phase one" trade deal with China, adding in a speech to the Economic Club of New York he will only accept a deal if it is good for his country and U.S. workers.  For weeks Trump has said the countries are close to a deal that would end their damaging trade war. He has also said the signing could take place in a rural part of the United States.  
  
Versus the Japanese yen, dollar found renewed buying at 108.99 in Australia and rose to 109.17 at Asian open due to rally in the Nikkei-225, and then ratcheted higher to an intra-day at 109.29 ahead of European open before retreating to 109.07 in New York morning. The pair then rebounded to 109.23 as U.S. stocks hit record highs before falling to an intra-day low at 108.93 in New York afternoon on broad-based buying in jpy.  
  
The single currency initially retreated to 1.1026 in Asian morning and then gained to 1.1038 but only to weaken to 1.1020 in European morning. Despite recovering again to 1.1036, renewed selling emerged and knocked price down to a 27-day bottom at 1.1003 in New York on cross-selling in euro. The pair then rebounded to 1.1019 on short-covering and ended at 1.1011 near the close.   
  
Reuters then reported the side effects of the European Central Bank's monetary policy are becoming more tangible, ECB Vice President Luis de Guindos said in remarks published on Tuesday, promising closer scrutiny of any adverse consequences.   "We have scope to take further action, and we will take further action should it become necessary," de Guindos told the Boersen-Zeitung newspaper. "But it's also clear, as I said, that the negative side effects are becoming ever more pronounced. What's more, in the current environment, with interest rates very low for longer, fiscal policy would have a much bigger impact on the economy than would otherwise be the case."   
He added: "So fiscal policy will need to play a much stronger role in future. We are well aware of the side effects of our monetary policy and we will hold the side effects up to even closer scrutiny in future and pay them even more attention."   
  
Although the British pound moved sideways in Asia, price met renewed selling at 1.2865 and intra-day fall accelerated at European open and then dropped in tandem with euro to session lows at 1.2816 before rebounding to 1.2843 after release of mixed UK jobs data. Cable then ratcheted higher to an intra-day high at 1.2873 at New York midday due partly to cross-buying in sterling especially vs euro.  
  
Reuters reported Britain's employers cut the most jobs in over four years between July and Septemmber, according to official data which highlighted how the labour market is slowing, just as an election nears.   The hitherto strong labour market has been a silver lining of the Brexit crisis as companies hired workers that they can lay off later if needed, rather than make longer-term commitments to investment.   The unemployment rate fell back to 3.8%, its lowest level since early 1975 during the third quarter.   
The ONS said the number of people in employment fell by 58,000 to 32.753 million.   That was less severe than the median forecast of a fall of 94,000 in a Reuters poll of economists but represented the biggest decline since the three months to May 2015.   The number of people out of work dropped by 23,000 to 1.306 million.   
The Office for National Statistics said total earnings growth, including bonuses, rose by an annual 3.6%, slowing from 3.7% in the three months to August and weaker than all forecasts in the Reuters poll, but not far off its highest pace in more than 10 years.   Excluding bonuses, which smooths out some volatility, pay growth also rose by 3.6%, again weaker than all forecasts.   
  
Data to be released on Wednesday :  
  
New Zealand food price index, RBNZ interest rate decision, Australia consumer sentiment, Japan corporate goods price, UK Rightmove house price, DCLG house price index, CPI, core CPI, RPI, core RPI, PPI input prices, PPI output prices, PPI core output, German CPI, HICP, EU industrial production, and U.S. MBA mortgage application, CPI, core CPI, real weekly earnings, Federal budget.