Dollar steady as US-China trade deal skates

Dollar steady as US-China trade deal skates

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The dollar index, which measures its evolution against 6 reference currencies, rose slightly (+ 0.07%) to 98 points, while the euro lost 0.12% to $1.1058. In the US bond markets, the 10-year T-Bond yield rebounded 2 basis points, to 1.77%, following the publication of the Fed Minutes, which confirmed a pause on key rates, after the 3 declines since last July.

On Wednesday night, ‘Reuters’ reported that the deal could be postponed until next year. The United States would refuse to dismantle the import taxes put in place for 18 months from this “Phase 1”, if they do not get firm commitments from China in respect of intellectual property rights and transfers of technology, sources close to the negotiations said.

According to these sources, Washington’s decision on taxes scheduled for December 15 will be decisive. If these new “tariffs” on about $156 billion of Chinese goods were finally put in place instead of being postponed, it would be a very negative signal for further negotiations and for the financial markets.

On Thursday, sources close to the White House said that Washington should agree to delay the implementation of these new taxes, to give a chance of success to the negotiations.

Addition to concerns on the trade front, the markets on Thursday learned of contrasting macroeconomic data in the United States. The index of regional manufacturing activity of the Philadelphia Fed for the month of November 2019 came out at +10.4, while the consensus of the economists of the place was of 7. The indicator was housed at 5.6 a month earlier. The November index signals an acceleration in the expansion of the manufacturing industry in the region.

Small disappointment on the other hand in the labor market, where weekly jobless claims for the week ended November 16 came out at 227,000 according to the US Department of Labor, up from 217,000 consensus and 227,000 for the revised reading of the previous week.

Oil prices continued their rebound, after reports that OPEC and its allies, including Russia, should decide to extend their production control agreement at their meetings on 5 and 6 December. The price of a barrel of US light crude gained Thursday 2.49% to $58.43 on the Nymex (December futures contract), while the Brent North Sea rose 2.52% at $63.97 for the January futures contract.

Prices also benefited from a lower than expected rise in US oil stocks for the week ended November 15, which has already made prices jump on Wednesday (+3.4% for WTI and +2.4% for Brent).

Gold on the other hand, went down Thursday on the Comex market, losing 0.62% to $1,465.10 for the December futures contract.

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I cover technology, utilities and biotechnology for Markets Morning, and I help out occasionally with other industry sectors. I've written about investment and personal finance topics for more than 20 years from a lowly copywriter to editor-in-chief, so I've done a little bit of everything. For what it's worth, I have a BA from Duke University and an MBA from Rollins College. I'm married with one daughter, and that's worth more than everything else put together.

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