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TradeFred Daily Briefing
Thu 09-01-2020 12:00

In Brief:

  • Yen & Swissie retreat as investors embrace risk-taking
  • Spot Gold & Gold Futures cool off
  • British retail spending plummets
  • World Bank trims global growth forecast

The Japanese Yen and Swiss Franc retreated on Thursday as the United States and Iran backed away from further conflict, with markets flipping back to the old habit of more risk-taking on hope of a US-China trade deal. US President Donald Trump responded overnight to an Iranian attack on US forces with sanctions, not violence. Iran offered no immediate signal it would retaliate further to a January 3 US strike that killed one of its senior military commanders.

The Yen, regarded as a safe haven in times of geopolitical turmoil because of its deep liquidity as well as Japan's current account surplus, quickly reversed its gains made after Wednesday's missile strike. Elsewhere, the Greenback moved higher while the US Dollar index rose by 0.28% to 96.75.

Britain does not want the European Union's principle that "nothing is agreed until everything is agreed" to define future trade talks, Prime Minister Boris Johnson's political spokesman said on Wednesday. During talks over the divorce deal, the EU insisted it would not agree different elements of Britain's exit piece by piece, to reduce what it saw as a risk of Britain cherry-picking the deal to its own advantage.

Oil prices climbed on Thursday after a rocket attack on Baghdad triggered fresh concern over the potential for conflict in the Middle East, a day after markets were roiled by an Iranian missile strike on Iraqi bases hosting US forces. But gains were muted as Washington and Tehran looked to defuse a crisis in the crude-producing region. Brent Crude futures rose 43 cents, or 0.7%, to $65.87 a barrel by 01:09 GMT, after seesawing through Wednesday to end with a 4.1% tumble.

Gold’s rally has cooled with President Donald Trump opting against further escalation of the US conflict with Iran. But that didn’t stop safe-haven buyers from pushing the market to near-seven-year highs above $1,600 on Wednesday. While the yellow metal’s more-than-1% drop on the day was the sharpest in over a month, the decisive move above $1,600 kept alive Gold bugs' hopes that the 2020 Gold rally was still in its early days. Gold futures for February delivery on New York’s COMEX settled down $14.10, or 0.9%, at $1,560.20 per ounce. The contract was down as much as 1.2% in post-settlement trade at 2:35 PM ET (19:35 GMT). Spot Gold, which tracks live trades in bullion, was down $20.15, or 1.3%, at $1,553.74.

South Korea's Samsung Group, whose leader faces trials over a bribery scandal involving former president Park Geun-hye, has appointed external experts to a new oversight panel to stamp out criminal conduct, the chief of the committee said on Thursday. The move came after a judge overseeing Samsung leader Jay Y. Lee's bribery case in October criticized the top conglomerate for its lack of an effective compliance system, saying one was needed to prevent wrongdoing by executives and its leader.

Asian markets rebounded in morning trade on Thursday after US-Iran tensions appeared to ease somewhat. China’s Shanghai Composite and the SZSE Component gained 0.5% and 1.1%. Elsewhere in Asia, Hong Kong’s Hang Seng Index rose 1.2%, Japan’s Nikkei 225 jumped 2.0% and South Korea’s KOSPI traded 1.1% higher. Down under, Australia’s ASX 200 climbed 0.6%.

Japan's justice minister launched a rare and forceful public takedown of auto executive-turned-fugitive Carlos Ghosn after he blasted the country's legal system as allowing him "zero chance" of a fair trial as he sought to justify his escape to Beirut. After his dramatic flight to Lebanon last month, Ghosn spoke in public for the first time on Wednesday, saying he had been treated "brutally" by Tokyo prosecutors. He said they questioned him for up to eight hours a day without a lawyer present and tried to extract a confession out of him.

British shoppers cut back on spending in late 2019, rounding off the worst year since at least the mid-1990s for retail sales as measured by an industry group which blamed uncertainty about Brexit and last month's election for the slump. However, another survey suggested Britons turned more confident after Prime Minister Boris Johnson's emphatic election victory on December 12. Total retail spending fell by an annual 0.9% in November and December combined, the British Retail Consortium said, lumping the two months together to smooth out volatility caused by changes in the dates of Black Friday between 2018 and 2019.

The World Bank on Wednesday trimmed its global growth forecasts slightly for 2019 and 2020 due to a slower-than-expected recovery in trade and investment despite cooler trade tensions between the United States and China. The multilateral development bank said 2019 marked the weakest economic expansion since the global financial crisis a decade ago, and 2020, while a slight improvement, remained vulnerable to uncertainties over trade and geopolitical tensions. In its latest Global Economic Prospects report, the World Bank shaved 0.2 percentage point off of growth for both years, with the 2019 global economic growth forecast at 2.4% and 2020 at 2.5%.

China's consumer inflation steadied while factory-gate prices fell at a slower pace in December, giving Beijing room to stay the course on monetary easing as economic growth cools. Some investors have worried that consumer inflation, hovering near eight-year highs, could make China's central bank more cautious about further stimulus. China's consumer prices in December rose 4.5% from a year earlier, National Bureau of Statistics (NBS) data showed on Thursday, unchanged from November's pace, but lower than analysts' forecast of 4.7%. The gains were again fueled by a surge in pork prices as African swine fever ravaged the country's hog herds.

Europe’s primary bond market had a record-setting day, with at least 32.7 billion Euros ($36 billion) of deals, as the Iran crisis failed to damp the usual early-January rush. Ireland and Portugal both sold 4 billion-Euro sovereign notes, after each drew more than 20 billion Euros of orders, according to separate people familiar with sales, who asked not to be identified because they’re not authorized to speak about them. The Netherlands’ BNG Bank NV issued a 2 billion Euro note.

Without a majority in parliament, Spain's new left-wing coalition faces a struggle to deliver on its promise to unpick a landmark 2012 labour reform that drove wages lower and made it easier for companies to shed workers. The Socialists led by Pedro Sanchez and the hard-left Unidas Podemos have committed, in a 50-page government agreement, to undo some major reforms carried out by conservative leader Mariano Rajoy under a 2012 deal with Eurozone partners in return for a financial bailout.

See Also

In Brief:

  • Yen holds firm while riskier Asian currencies soften
  • Oil prices slip on news that tariffs will remain despite US-China trade deal
  • Gold snaps losing streak
  • Amazon to invest $1bn to bring Indian SMEs online

The safe-haven Yen held firm and riskier Asian currencies softened a little on Wednesday, as currency investors awaited the signing of the US-China trade deal with trepidation. The formal agreement is aimed at drawing a line under 18 months of tit-for-tat tariff hikes that have hurt global growth, but it will not end the trade dispute between the world's two largest economy. The USD/CNY pair lost 0.2% to 6.8943 by 12:01 AM ET (04:01 GMT).

TradeFred Daily Briefing

TradeFred Daily Briefing