Dollar Starts New Week On Firm Note

Overview:  Lifted by the re-opening of Chinese markets after the week-long Lunar New Year holiday, global equities are trading firmer. Outside of Japanese markets that were closed, the large markets in Asia--China, Taiwan, South Korea, and Hong Kong advanced. European bourses are following suit, and the Dow Jones Stoxx 600 is up more than three-quarters of a point through the morning session. US shares are also trading higher. Core benchmark 10-year yields are mostly one-two basis points firmer, while the yields in the European periphery are lower, led by Italy. The dollar is firmer against most of the major currencies. The Norwegian krone is the weakest of the majors after a soft CPI figure fanned doubts that the central bank will hike rates next month. The Swiss franc recovered fully from the mini-flash crash that saw it drop nearly 1% in a few minutes early in Asia. Brent oil is firmer, while WTI is heavier, giving back its pre-weekend gains.  Iron ore was limit up in Shanghai. 

Asia Pacific

US-Chinese trade talks resume in Beijing this week. The markets still seem inclined to expect an agreement, even if it is not the final word in the rivalry. Still, it is hard to see a breakthrough unless and until the two presidents meet. That does not look likely this month, but the US is holding out the possibility of a meeting in March in the US. That suggests the tariff freeze is likely to be extended.  

Chinese spending during the Lunar New Year holiday is estimated to have grown 8.5% to CNY1.01 trillion. If confirmed, it would be the smallest celebration since 2011. Chinese small-cap shares led the local markets higher. ChiNext rose 3.5% and the Shenzhen Composite 2.9%. The yuan fell almost 0.7%, its largest fall since October. Over the past week, while Chinese markets have been closed, the Dollar Index rose 1.1%, the euro and sterling both fell by a little more than 1%, while the yen fared better. The offshore yuan (CNH) fell 0.4% last week. 

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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