TradeFred Daily Briefing

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).

Citing people familiar with the matter, Bloomberg reported that existing US tariffs on Chinese goods are likely to stay in place until after the American presidential election in November. The US Dollar was flat Tuesday, as sentiment on risk was hurt slightly on a report that US tariffs on Chinese goods will remain in place through the 2020 election despite both sides expected to wrap up the phase one trade deal on Wednesday. The US Dollar index, which measures the Greenback against a trade-weighted basket of six major currencies, fell by 0.01% 97.34.

Oil prices slipped on Wednesday on concerns that the pending Phase 1 trade deal between the United States and China, the world's biggest oil users, may not boost demand as the US intends to keep tariffs on Chinese goods until a second phase. US Treasury Secretary Steven Mnuchin said late on Tuesday that tariffs on Chinese goods will remain in place until the completion of a second phase of a US-China trade agreement, even as both sides are expected to sign an interim deal later on Wednesday. US Crude Oil WTI Futures fell 0.3%$ to $58.08 by 11:15 PM ET (03:15 GMT), while International Brent Oil Futures dropped 0.3% to $64.33.

Gold prices rebounded on Wednesday, snapping its recent declining streak amid fresh uncertainties surrounding the US-China trade front. US Gold Futures gained 0.6% to $1,553.15 by 12:47 AM ET (04:47 GMT).

Willie Walsh, head of the British Airways parent company, has attacked a UK government-backed rescue of regional UK airline Flybe, calling it a misuse of public funds. Flybe was kept afloat on Tuesday after its shareholders agreed to invest more money while the government provided support, reported to involve the deferral of a tax bill.

JPMorgan has initiated coverage of Saudi Aramco's shares with an "overweight" rating and a price target of 37 Riyals ($9.86) per share, saying it sees scope for the company to increase its proposed $75 billion base dividend.

Malaysia Airlines said on Wednesday it has suspended deliveries of 25 Boeing Co 737 MAX jets, citing the plane's delayed return to service since it was grounded last year following two fatal crashes. The decision represents another setback for Boeing, which on Tuesday reported its worst annual net orders in decades, along with its lowest number of plane deliveries in 11 years, as the grounding of the 737 MAX saw it fall far behind main competitor Airbus SE. Inc CEO Jeff Bezos said his company will invest $1 billion to bring small and medium-sized businesses online in India and expects to export $10 billion worth of India-made goods by 2025. Bezos' visit comes amid strident criticism from small business owners who accuse the company and Walmart's Flipkart of unfair business practices. The companies deny the allegations.

Sales of private apartments in Singapore fell in December as fewer new developments were launched, in a further sign the property market is cooling. Developers sold 538 units last month, down from 1,165 in November, Urban Redevelopment Authority data released Wednesday showed. The decline came as fewer projects were launched, with 370 new apartments hitting the market - the lowest for all of 2019 - versus 947 in November.

South Korea’s employment rate hit a record high in 2019, offering President Moon Jae-in evidence that he is delivering on his pledge to provide more jobs, ahead of a parliamentary election. The employment rate climbed to 60.9% last year, boosted by an increase in part-time work, statistics office data showed Wednesday. At first glance, the figure appears to contradict the view among Moon’s opponents and some economists that his policies, including a higher minimum wage strategy, have priced people out of work.

The Trump administration plans to put in place new procedures governing the release of market-sensitive economic data that would hinder news organizations from preparing stories in advance under embargo, Bloomberg News reported on Tuesday, citing unnamed people familiar with the matter. Bloomberg said the changes could extend to the removal of computers from a government "lockup" room used by media and that an announcement could come as soon as this week.

US consumer prices rose slightly in December even as households paid more for healthcare, and monthly underlying inflation slowed, supporting the Federal Reserve's desire to keep interest rates unchanged at least through this year. The weak inflation report from the Labor Department on Tuesday came on the heels of data last week showing a moderation in job growth in December. Economists said these developments were flagging a sharp slowdown in domestic demand. Though the economy appears to have maintained a steady pace of growth in the fourth quarter, it was likely supported by falling imports.

China's economic growth likely hovered at its weakest in nearly 30 years in the fourth quarter as demand at home and abroad remained sluggish, though there were some signs of improvement late in the year as trade tensions with the United States eased.

Western Asset Management Co is reducing its Indian government bond holdings as tensions around a new citizenship law and the Kashmir region cloud the economic outlook. The $453 billion investor, an affiliate of Legg Mason Inc, is diverting some of its funds into longer-dated Malaysian and Chinese debt, according to Desmond Soon, head of investment management for Asia ex-Japan. It has an overweight position in India bonds.