U.S. to Lift Yuan Manipulator Tag Ahead of China Trade Deal

© Reuters.  U.S. to Lift Yuan Manipulator Tag Ahead of China Trade Deal © Reuters. U.S. to Lift Yuan Manipulator Tag Ahead of China Trade Deal

(Bloomberg) — President Donald Trump’s administration plans to lift its designation of China as a currency manipulator, people familiar with the matter said, removing an obstacle to a trade deal the two nations are set to sign this week.

The Treasury Department will make the move in a semi-annual report, expected to be released soon, after being delayed as the U.S. and China finalize a “phase one” trade pact, said the people, who spoke on condition of anonymity.

Treasury Secretary Steven Mnuchin in August first formally labeled China a currency-manipulator, a move that further escalated the trade war with Beijing after the country’s central bank allowed the yuan to fall in retaliation to new U.S. tariffs.

A Treasury Department spokeswoman declined to comment. A reporter for Fox Business Network earlier tweeted the news about Treasury’s plans.

Now that a deal is in sight, the designation is being lifted. The administration had at one point considered maintaining the label and instead announcing it would monitor the yuan with the possibility of lifting the designation in August of this year, according to the people.

The offshore strengthened to 6.883 per dollar on Monday.

Mnuchin’s August 2019 announcement prompted authorities in Beijing to increase transparency around how they manage the yuan. Some of that data has provided support for the Treasury’s view that the People’s Bank of China engages in competitive devaluations of its currency, the people said.

But economists have criticized the U.S. decision to call China a manipulator. The International Monetary Fund said in September the yuan is fairly valued and that there’s no evidence of manipulation. China’s weakening currency could also be attributed to a slowdown in growth.

China also doesn’t meet the criteria outlined in a 2015 U.S. law for formally designating a country a currency-manipulator. Mnuchin instead relied on a 1988 trade law that has a looser definition of currency manipulation to justify the claim. He did so after the yuan broke the 7 per dollar level for the first time since 2008, drawing Trump’s ire. Mnuchin had resisted using the label in the previous five reports he released.

The August announcement was made in a press release, outside the normal issuance of the report. That left currency strategists and policy experts without a full explanation for the decision. Treasury’s currency report examines 20 countries for possible currency manipulation, a number that was increased from 12 in May.

Trump was involved in drafting the press release, which on his direction refers to China as a “Currency Manipulator,” using capital letters, one of the people said.

When Treasury officials briefed congressional committees in August on their decision, they read quotes by Chinese leadership officials stating that they had all the necessary tools to prop up the yuan. According to the Treasury officials, those statements prove intent and serve as evidence that the country was manipulating its currency, two people familiar with the briefings said.

Mnuchin in October said that if a trade deal with China were signed, he would consider removing the manipulator tag, saying that signing an agreement would be “a big step in the right direction.”

(Updates with market move in sixth paragraph.)

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Fresh trade deal hopes gently lift dollar, Aussie

By Tom Westbrook

SINGAPORE (Reuters) – The dollar and riskier trade-exposed currencies found some support on Friday as fresh hopes for a breakthrough in Sino-U.S. trade talks were tempered with caution.

White House economic adviser Larry Kudlow said late on Thursday that the two parties were getting close to a deal and the “mood music is pretty good”.

He offered no new details, but the sentiment was enough to reverse a little of the safe-haven Japanese yen’s overnight gain and to buoy the Australian and New Zealand dollars.

The yen fell 0.2% to 108.57 per dollar and dropped 0.3% on the rising .

The Australian dollar , which had tumbled on Thursday after an unexpected rise in the national unemployment rate, added 0.2% to $ 0.6795.

The New Zealand dollar rose 0.1% to $ 0.6388. China’s yuan rose 0.2% but remained just shy of strengthening past the 7-per-dollar level at 7.0076.

Against a basket of six major currencies () the greenback was steady at 98.140 as caution and the lack of concrete news in Kudlow’s remarks kept a lid on risk appetite.

“It may not be a game-changer,” said Terence Wu, a treasury strategist at OCBC Bank in Singapore. “Thus, we think any reversal in the risk-off trades may not see a good shelf-life.”

Mixed signals on trade negotiations have abounded in recent days while evidence of the damage the dispute is wreaking on the global economy has mounted.

The next scheduled economic updates are Eurozone trade and inflation data due at 1000 GMT and the New York Fed manufacturing survey due at 1330 GMT.

On Thursday, China’s commerce ministry said the two countries are holding “in-depth” discussions, while U.S. President Donald Trump said on Tuesday a deal was close.

But the Financial Times, citing unidentified people close to the talks, said an agreement may not be reached in time to avoid a new round of U.S. tariffs taking effect on Dec. 15.

Sub-par growth figures on Thursday from China and Japan, followed by lackluster updates in Britain and Europe underlined the potential downside if a deal falters.

Few are game to make a decisive call either way.

“Until we’ve got the word from Donald Trump, no-one’s really willing to get in front of it,” said Jason Wong, senior market strategist at BNZ in Wellington.

The British pound, meanwhile, sat near peaks scaled overnight.

Sterling touched a six-month high against the euro and gained on the dollar as expectations that Britain’s ruling Conservative Party might win a majority in a Dec. 12 election fueled optimism the Brexit impasse will finally end.

The pound stood at $ 1.2880 and at 0.8559 pence per euro in Asian trade. “Markets now appear to be priced for a high likelihood of a majority Conservative government,” RBC Chief Currency Strategist Adam Cole said in a note.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Global optimism, UK spending promises lift long gilt yields to three-month high

© Reuters.  Global optimism, UK spending promises lift long gilt yields to three-month high © Reuters. Global optimism, UK spending promises lift long gilt yields to three-month high

By David Milliken

LONDON (Reuters) – British long-dated government bond yields rose to their highest in more than three months on Thursday as a global improvement in risk appetite and the prospect of big increases in public spending overshadowed a more dovish Bank of England.

Ten-year gilt yields () peaked at 0.814%, up around 9 basis points on the day and the highest since July 16, and 20- and 30-year yields gained a similar amount () ().

By contrast, two-year yields () barely budged — pinned down by an unexpected split vote at the Bank of England — and the two-year/10-year yield curve rose to its steepest since July 15 at 24 basis points.

The steepening yield curve reflected countervailing forces at play for different maturities of gilts.

Markets received a shock earlier in the day when two BoE policymakers unexpectedly voted to cut rates, and the majority said a rate cut could become necessary if Brexit uncertainty and a global slowdown did not ease.

One measure of interest rate expectations now prices in a two thirds chance of a quarter-point BoE rate cut by the end of next year, compared with just over half on Wednesday, pushing down on two-year and five-year gilt yields, which are already well below the BoE’s 0.75% Bank Rate.

But the broader tone in markets on Thursday was negative for fixed income assets, bolstered by increased optimism about a trade deal between the United States and China.

German 10-year Bunds , like their British counterparts, rose to their highest since mid-July.

And for longer-dated gilts, there was added upward pressure on yields from the second day of Britain’s election campaign, in which both the Conservative Party and the Labour opposition promised big increases in spending if they win the Dec. 12 vote.

The fiscal news was “arguably more significant” for gilts than the BoE decision, Capital Economics analyst Oliver Allan wrote in a note to clients.

Labour’s would-be finance minister, John McDonnell, promised an extra 150 billion pounds ($ 192 billion) of infrastructure spending during the next five years, on top of 250 billion pounds he has already promised for the coming decade.

McDonnell’s Conservative counterpart, Sajid Javid, said he would spend an extra 100 billion pounds.

Both plans would require a significant increase in gilt issuance over the medium term, and could push up inflation or BoE rates if the spending hits the economy at a time when it is close to full capacity.

However, Capital said it expected the increase in British yields to be limited as any significant rise would attract foreign investors at a time when yields on much euro zone debt are below zero.

“Although UK yields are low historically, they are not particularly low relative to those elsewhere in the developed world,” Allen said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Delhi city government rejects AB InBev plea to temporarily lift ban: source

By Aditya Kalra

NEW DELHI (Reuters) – Authorities in New Delhi have rejected a plea by Anheuser-Busch InBev (BR:) to temporarily lift a 3-year ban while it hears the global brewer’s appeal, a senior government source told Reuters.

AB InBev, the world’s largest brewer, has been barred from selling its products in the critical New Delhi market for allegedly evading local taxes, Reuters reported last week. The company has denied the allegations.

A three-year investigation by authorities in India’s capital found that SABMiller (LON:) – acquired by AB InBev in 2016 for around $ 100 billion – used duplicate barcodes on beer bottles supplied to retailers that year, allowing it to pay lower levies.

AB InBev has appealed against the ban to the Commissioner of Excise in the Delhi city government, two government sources with direct knowledge said. The ban order was passed by a deputy commissioner of the division.

While the company’s appeal is still under consideration, AB InBev also filed a separate plea with the Commissioner for putting the ban order on hold pending appeal, but that request was turned down, one of the government sources said on Tuesday.

“The (ban) order was detailed, there was no ground to give an interim stay,” said the official, who declined to be named as the decision is not public.

AB InBev, which counts popular beer brands such as Budweiser, Hoegaarden and Stella Artois in its portfolio, said the city’s allegations dated back to 2016 before its takeover of SABMiller and it looked forward to receiving a “fair hearing”.

“We are strongly committed to operating with integrity and high ethical standards and making the City of Delhi part of our larger growth story in India,” it said in a statement.

In recent weeks, AB InBev’s senior executives, including vice president for legal & corporate affairs for South Asia, John K. Johnson, appeared before the Delhi officials who are hearing the company’s appeal, the second government source and a third person familiar with the matter said.

AB InBev is the second biggest player in India’s $ 7 billion beer market, accounting for a 17.5 percent market share, according to research firm IWSR Drinks Market Analysis.

The New Delhi case was sparked by a random inspection of beer bottles at a drinking spot in an upmarket New Delhi neighborhood in 2016.

The order, issued on July 16, said it was “reasonable to believe” same barcodes were duplicated multiple times and supplied to various retail vendors in Delhi, amounting to the offence of selling non-duty paid liquor.

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Forex – Dollar Drifts Higher as Robust GDP, China Bounce Lift Mood

© Reuters.  © Reuters.

Investing.com — The is drifting higher against other major currencies in early trading in Europe Friday, after a broadly upbeat reading for U.S. was followed by a surprise bounce in Chinese factory activity.

The news that the U.S. economy had grown by an annualized 2.6% in the fourth quarter – and by over 3% for the full year for the first time since 2005 – drove yields to a three-week high, supporting demand for the greenback.

It then strengthened further overnight, hitting a 10-week high against the after a disappointing slide in in Japan. By 03:00 ET, the dollar was at 111.81 yen, only just below the intra-day high.

The yen had also been weakened by more encouraging data from China’s manufacturing survey early Friday, encouraging to traders to put on more yen-funded carry trades. The general improvement in risk appetite also lifted the and the a touch.

Further purchasing manager indexes are due throughout the morning in Europe, along with February jobless data from and and and data from the U.K. for January.

A little more confidence is also returning to the , which is now up more than a cent from its February low against the dollar, thanks to signs of progress on Brexit and, at the edges, signs that the economy may be bottoming out. German data for January, released earlier, rose by a surprisingly large 3.3% on the month.

The , meanwhile, is taking a breather after hitting its highest against the euro in nearly two years on Thursday after U.K. regulators confirmed a long grace period for financial firms adapting to new rules after Brexit. The move – which still needs confirmation from the U.K. government – further reduces the risk of a disorderly split from the European Union. Against the dollar, the is consolidating its recent gains around the $ 1.3250 level.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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