FOMC Minutes Gave Some Boost to the Dollar, Trump-Xi Meeting in Focus

Market Reviews

On currency markets, the US dollar is trying to recover after release of the FOMC minutes. The USD is still trading up against Japanese yen, British pound and Canadian dollar for the week. New Zealand dollar and Japanese yen are trading as the strongest ones. Swiss franc is the weakest one today with Australian dollar. Euro and British pound are trading mixed.

On stock markets, major US indices closed slightly lower overnight. DOW lost 0.11%, S&P 500 fell 0.22% and NASDAQ dropped 0.25%. In Asia, Nikkei added 0.39%, Singapore Strait Times gained 0.53%, Hong Kong HSI and China SSE rose 0.69% and 0.23% respectively.

The FOMC has released the minutes from the Federal Reserve’s November 7-8 monetary policy meeting. The minutes for the November revealed that the members still considered a rate hike in December is appropriate. Members continued to expect that further gradual increases in the target range for the federal funds rate would be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Fed’s 2% objective over the medium term.

The focus is now on a planned meeting between US President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires between November 30-December 1. Ahead of the highly anticipated meeting, Trump tried to sound hardline in his comments on the trade negotiations. He told yesterday that “I think we’re very close to doing something with China but I don’t know that I want to do it.”

Trump has said he plans to significantly hike the existing 10% tariffs on Chinese imports by January next year, which would sharply escalate the trade war between the world’s two largest economies.

Today’s data showed, that Japan industrial production rose strongly by 2.9% mom in October, above expectation of 1.2% mom. Japan unemployment rate rose to 2.4% in October, above expectation of 2.3%. Tokyo CPI core was unchanged at 1.0% yoy in November, matched expectations. China PMI manufacturing dropped -0.2 to 50 in November. PMI non-manufacturing dropped -0.5 to 53.4. Australia Private sector credit rose 0.4% mom in October. New Zealand building permits rose 1.5% mom in October. UK Gfk consumer sentiment fell by 2 to -13 in November.