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Feb 22, 2019

FX | Currencies Report on Feb. 22, 2019: Dollar slips as safe-haven allure eases on US-China trade comments

Saheli Roy Choudhury

Reusable dollar pound bills
Matt Cardy | Getty Images
The dollar fell on Friday as investors took on riskier assets after top U.S. and Chinese leaders said a trade deal between their countries was likely.
Just over a week remains before higher tariffs can be triggered by the expiration of a U.S.-imposed deadline for an agreement. But on Friday, U.S. President Donald Trump and Chinese President Xi Jinping both said significant progress had been made in the trade talks and that a deal was possible in the near future. Xi’s message was delivered in a letter to Trump.
Trump also said on Friday that if he saw progress in trade talks with China, he might be inclined to extend negotiations beyond a March 1 deadline, and suggested it was likely the globe’s two largest economies would be able to make a deal.
“The market has moved back to a risk on-mode putting downward pressure on the dollar,” said Alfonso Esparza, senior market analyst at OANDA in Toronto. “Stocks and commodities have moved up on dollar softness and the optimism that even if the March 1 deadline approaches it will not immediately trigger new tariffs,” he added.
In afternoon trading, the dollar index was down 0.06 percent at 96.54. The greenback this week has fallen 0.5 percent, after gaining more than 1 percent the previous week, in an uneven performance following mixed U.S. economic data.
The euro was flat against the dollar on Friday. Weak data since January has undermined support for the single currency, which last traded at $1.1334. It hit a two-week high on Wednesday, helped by hopes for an easing of the U.S.-China trade conflict.
Analysts assessing the euro’s prospects are focused on whether a slowdown in European growth is likely to be protracted. A survey on Friday showed business morale fell in February for a sixth straight month in Germany, the mainspring of the European economy.
The Australian dollar, however, rebounded after China denied it had banned imports of the country’s coal. Reuters reported on Thursday that the Chinese port of Dalian had barred imports of Australian coal indefinitely, pushing the Aussie dollar down 1 percent. China said on Friday, however, that imports would continue, but customs has stepped up checks on foreign cargoes.
The Aussie dollar was last up 0.6 percent at US$0.7134

Source: CNBC

Bond Yields Report on February 22, 2019 | Treasury yields fall amid US-China trade talks

Thomas Franck

U.S. Markets Overview: Treasurys chart

US 3-MOU.S. 3 Month Treasury2.450.0020.00
US 1-YRU.S. 1 Year Treasury2.544-0.0050.00
US 2-YRU.S. 2 Year Treasury2.495-0.0340.00
US 5-YRU.S. 5 Year Treasury2.471-0.0370.00
US 10-YRU.S. 10 Year Treasury2.654-0.0340.00
US 30-YRU.S. 30 Year Treasury3.014-0.0310.00
Market players continue to monitor the latest round of negotiations between Washington and Beijing. Optimism has risen over the chances of both countries securing a deal to end their protracted trade war, but some experts say the most difficult part is yet to come as high level talks continue into Friday.
“There’s obviously an incentive for both sides to reach a deal,” James Athey, senior investment manager at Aberdeen Standard Investments, told CNBC’s “Squawk Box Europe ” on Friday.
“The problem is that you’re now getting to the more difficult part of the negotiation, which is things like the IP (intellectual property) problem.”
One of President Donald Trump’s biggest contentions with Beijing is the claim that the country has stolen intellectual property and trade secrets from American companies. Both nations are a week away from an early March deadline to secure a trade deal, however speculation has risen there may be an extension to that target.
The Federal Reserve, starting on Monday, will hold a series of “Fed Listens” events aimed at getting input from business leaders, community development pros and academics. The central banks hopes to gather advice in a report to be presented in the first half of 2020.
“The economy is constantly evolving, bringing with it new policy challenges. So it makes sense for us to remain open minded as we assess current practices and consider ideas that could potentially enhance our ability to deliver on the goals the Congress has assigned us,” Fed Vice Chairman Richard Clarida said during a speech Friday in New York.
— CNBC’s Jeff Cox, Ryan Browne and Spriha Srivastava contributed reporting.

Source: CNBC

Wall Street Market Closing Report | Dow rises more than 150 points to retake 26,000, notches 9-week winning streak

Fred Imbert, Ryan Browne

Stocks rose on Friday as another round of trade talks between the U.S. and China wrapped up with investors increasingly more hopeful a deal will be struck.
The Dow Jones Industrial Average gained 180 points as Intel outperformed. The 30-stock index also broke above 26,000 for the first time since early November and posted its ninth consecutive weekly gain, its longest streak since May 1995. The Nasdaq Composite advanced 0.9 percent as shares of Facebook, Amazon, Netflix and Alphabet all closed higher. The tech-heavy Nasdaq also notched its ninth straight weekly gain, its longest streak since May 2009.
The small-caps Russell 2000 gained 0.9 percent and recorded its longest weekly winning streak since 1996.The S&P 500 climbed 0.6 percent, led by gains in the tech sector.

Stocks have been off to a roaring start to the year. The major indexes are all up at least 11 percent in 2019 as the Federal Reserve indicates it will be patient in raising rates. Hopes the U.S. and China end their trade skirmish has also boosted equities. The gains also follow a massive drop in equities to end 2018.
“It’s pretty extraordinary the amount of gain that we’ve had,” said Thomas Thornton, founder and president of Hedge Fund Telemetry. But “many of my indicators are showing very overbought conditions now with more and more upside exhaustion signals.”
“I really wish I could pick a sector that had defensive qualities right now, but everything has gone up so dramatically that when the pullback comes, it will probably be widespread,” Thornton said. 
Traders and financial professionals work ahead of the opening bell on the floor of the New York Stock Exchange (NYSE), January 14, 2019 in New York City.
Drew Angerer | Getty Images
President Donald Trump met with Chinese Vice Premier Liu He on Friday. Liu delivered a letter to Trump saying Chinese President Xi Jinping hopes the two countries can redouble efforts to strike a trade deal. The major indexes fell from their session highs on those comments.
Trump’s meeting with Liu on Friday comes after a U.S. delegation met with Xi last week. Sources told CNBC that Trump and Xi are also discussing a summit at Mar-a-Lago late in March.
“This is constructive not just for the market but also for the global economy,” said Quincy Krosby, chief market strategist at Prudential Financial. A deal “would help the Chinese economy stabilize. That obviously helps the global economy.”
“It has a broader impact than the bilateral U.S.-China relations,” Krosby said.
Optimism has risen over the chances of both countries securing a deal to end their protracted trade war, but some experts say the most difficult part is yet to come.
“There’s obviously an incentive for both sides to reach a deal,” James Athey, senior investment manager at Aberdeen Standard Investments, told CNBC “Squawk Box Europe ” on Friday. “The problem is that you’re now getting to the more difficult part of the negotiation, which is things like the IP (intellectual property) problem.”
Trade tensions between the U.S. and Europe are also increasing. The European Union is preparing to target heavy machines made by U.S. companies like Caterpillar if the U.S. slaps tariffs on cars made in the EU, according to a Bloomberg News report. Shares of Caterpillar dipped before the bell on the report, but traded slightly higher after the open.
The Trump administration is threatening to slap tariffs of up to 25 percent on European autos and auto parts.
“The markets may find that, as soon as they get out of the frying pan with respect to China, they may find themselves back in the fire with respect to Europe,” said Bruce McCain, chief investment strategist at Key Private Bank. “For that reason, this market that has risen very sharply and very quickly in a world that has not resolved all of its problems, could lead to some disappointment.”
“It’s not like we need to be discouraged and raise tons of cash, but I think that the optimism in the market is probably overdone at this point,” McCain said.
Intel shares rose more than 2 percent on Friday after Morgan Stanley upgraded the stock to overweight from equal weight, noting Intel could get a boost now that Bob Swan is the full-time CEO.
Shares of Kraft Heinz plummeted 27.46 percent after the consumer products company disclosed an SEC subpoena from an investigation into its accounting practices. The company also disclosed a $15.4 billion write down.

Source: CNBC

Crude Oil Price Closing Report | Oil slips 20 cents, settling at $56.96, as US crude stockpiles, output and exports rise

Tom DiChristopher

Reusable: Texas oil production fracking worker cleans off truck 150204
A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.
Getty Images
Oil prices slipped from 2019 highs on Thursday, as U.S. government data showed a fifth weekly build in crude inventories and record production, while concerns about slowing global economic growth weighed.
Losses were capped by OPEC-led supply cuts and U.S. sanctions on Venezuela and Iran. Advancements in Washington-Beijing trade deal discussions also supported prices.
U.S. West Texas Intermediate crude oil futures ended Thursday’s session 20 cents lower at $56.96 a barrel. WTI hit a fresh three-month high of $57.61 earlier in the day.
Brent crude futures fell by 13 cents to $66.95 around 2:25 p.m. ET, after touching a 2019 peak on Wednesday at $67.38.
U.S. crude oil stockpiles rose to the highest in more than a year, as production hit a record high and seasonal maintenance kept refining rates low last week, the Energy Information Administration said.
U.S. crude stocks rose 3.7 million barrels in the week to Feb. 15, to 454.5 million barrels, the highest since October 2017, even as crude exports surged 1.2 million barrels per day to a record 3.6 million bpd.
“All in all the report is bearish, in particular the strong increases in crude oil stocks,” said Cartsen Fritsch, analyst at Commerzbank in Frankfurt.
Production in the United States, which last year became the world’s top crude producer, rose to record high at 12 million bpd, which could also dampen sentiment, Fritsch said.
Still, tightening supply globally helped keep losses at bay.
Oil prices have been driven up this year after the Organization of the Petroleum Exporting Countries and producer allies such as Russia, known as OPEC+, agreed to cut output by 1.2 million barrels per day (bpd) to prevent a supply overhang from growing.
OPEC member Nigeria signalled on Wednesday that it would limit output after its production climbed in January.
“Willingness of the OPEC+ group to adhere with the output cut agreement will remain supportive of oil prices in the run-up to their scheduled April meeting,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London.
“Sharply declining oil output from Iran and Venezuela will further prompt bullish sentiment in the market.”
U.S. sanctions have hit Iranian and Venezuelan crude exports while unrest has curbed Libyan output.
Talks between the United States and China to resolve a trade dispute which has dented global growth may be progressing, helping to lift crude prices.
The two sides have started to outline commitments in principle on key points of contention, sources familiar with the negotiations told Reuters.
However, analysts said that a global economic slowdown — signs of which emerged late last year — was preventing prices from surging beyond highs reached this week.
— CNBC’s Tom DiChristopher contributed to this report.

Source: CNBC

Metals Price Closing Report | Gold heads for second weekly gain on growth concerns

Tom DiChristopher

Reusable Gold bullion american eagle
Gold will continue to shine amid a weak dollar, says author and gold pro Jim Rickards.
Simon Dawson | Bloomberg | Getty Images
Gold was steady on Friday but still on track for a second weekly gain as sluggish U.S. economic data stoked worries about a global slowdown and investors awaited signals on U.S.-China trade talks.
Spot gold was up 0.53 percent at $1,330.38 per ounce by  1:57 p.m. ET.
U.S. gold futures were settled $5 higher at $1,332.80 per ounce.
“The market is expecting the dollar to weaken. We expect growth in the U.S. to slow,” said Natixis analyst Bernard Dahdah.
The dollar index fell 0.16 percent versus six major currencies on Friday and set for its biggest weekly fall in a month. The U.S. currency, which has been a refuge for investors during the U.S.-China trade spat, has come under pressure on signs of a breakthrough in talks.
Minutes of the U.S. Federal Reserve’s last meeting painted a less dovish picture than expected on future interest rates hikes, weighing on gold in the last two sessions. Higher rates reduce investor interest in non-yielding bullion.
But data showing new orders for key U.S.-made capital goods unexpectedly fell in December, revived some market expectations that the central bank would halt the 2019 rate hike cycle.
It added to jitters about a slowdown in Europe and China, which analysts said bolstered the appeal of gold, considered a safe haven in times of uncertainty.
“The main target (for gold) is still the technically important area between $1,350 and $1,360 above which would be a one-year high,” said Ronan Manly, a precious metals analyst at BullionStar Singapore.
Investor attention has turned to U.S. and Chinese trade talks, which have shown some positive signs.
But holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.6 percent to 789.51 tonnes on Thursday.
Dahdah at Natixis said the slight pullback did not signal a shift by gold investors since the levels were still close to highs recorded at the start of 2019.
Elsewhere, palladium gained 1.74 percent to $1,494 per ounce, having topped the psychologically significant $1,500 level for the first time on Feb. 20.
The autocatalyst metal was on track for a third straight week of gains, up about 3.4 percent.
Platinum rose 2.44 percent to $839, and was set for its best week since early January. Silver was up 0.79 percent to $15.94, poised to snap two weekly losses.

Source: CNBC

Europe Markets Closing Report: European markets close higher as US-China trade talks wrap up; Elekta shares dive 13%

Sam Meredith

European stocks closed slightly higher Friday afternoon, as market participants monitored trade talks between the world’s two largest economies.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE7184.3516.960.24429670723
The pan-European Stoxx 600 closed up around 0.2 percent provisionally, with most sectors and major bourses ending in positive territory. On the week, the benchmark was up by around 0.6 percent.
Europe’s basic resources stocks — with their heavy exposure to China — led the gains during afternoon trade, closing up by around 2 percent. It comes as market focus is largely attuned to global trade negotiations, with little more than a week left before a U.S-imposed deadline for an agreement with China expires.
Chinese Vice Premier Liu He is scheduled to meet with President Donald Trump at the White House on Friday. The meeting follows reports that both sides have started to outline commitments in principle on the stickiest issues in their protracted dispute.
Looking at individual stocks, France’s Sopra Steria Group surged to the top of the European benchmark. The consultancy group reported full-year revenue jumped almost 7 percent in 2018 and forecast a slight improvement in operating margin on business activity. Shares of the Paris-listed stock rose more than 17 percent on the news.
Meanwhile, Swedish radiation therapy equipment maker Elekta tumbled to the bottom of the index. The company posted weaker-than-expected third-quarter core profit on Friday, prompting shares to tank over 13 percent.
Economic data
On the data front, business morale in the euro zone’s largest economy fell for the sixth time in succession in February, official data showed on Friday. The Munich-based Ifo economic institute said its business climate index for Germany slipped to 98.5 this month, its lowest level since December 2014.
On Wall Street, stocks rose with hopes building over the U.S.-China trade talks. Intel shares rose more than 2.5 percent in early deals after Morgan Stanley upgraded the stock to overweight from equal weight.

Source: CNBC