Date: November 16, 2018
World’s Biggest Dollar Bull Doubles Down on Euro Pain for 2019
The world’s biggest dollar bull is sticking to his guns as the U.S. economy powers ahead and dangles some of the highest interest rates versus Europe in history. Wall Street’s “America First” playbook in 2019 will pack more punch, boosting the greenback along the way, according to David Bloom at HSBC Holdings Plc. “The market is perpetually looking for a U.S. slowdown, and it’s just not happening,” Bloom said in an interview in Madrid. “Why wouldn’t you buy the dollar? Even if the world goes risk-off, and the Fed has to cut rates, the dollar — and the yen — will win.” “The market is perpetually looking for a U.S. slowdown, and it’s just not happening,” Bloom said in an interview in Madrid. “Why wouldn’t you buy the dollar? Even if the world goes risk-off, and the Fed has to cut rates, the dollar — and the yen — will win.” The chief currency strategist is seeing vindication for his bullish stance held since April, after the greenback advanced more than 6 percent against the euro, and upended investment strategies across the globe. Bloom reckons the dollar will strengthen to $1.10 per euro by the end of next year — a 3 percent upside from current levels for the world’s most-traded pair. That’s a weaker euro forecast than any of the 19 estimates tracked by Bloomberg. Bloom is also more dollar-bullish than consensus across a slew of FX pairs, including the South African rand. Investors are set to gobble up U.S. assets anchored by a robust business cycle that’s sustaining rate hikes, while haven demand may fuel the greenback should traders turn skittish, he said.
Prospects for Russia’s Sanctions-Bruised Economy Are Dim
Sanctions may have knocked as much as 6 percent off Russia’s economy over the past four years and the drag isn’t likely to go away anytime soon. Research by Bloomberg Economics has found that the economy of the world’s biggest energy exporter is more than 10 percent smaller compared with what might have been expected at the end of 2013, before the Crimea crisis triggered wave after wave of restrictions by the U.S. and EU. While some of the blame falls on the slump in oil prices, sanctions are the bigger culprit.
China Outlines Possible Concessions to U.S. Ahead of G-20 Talks, Sources Say
Chinese officials have outlined a series of potential concessions to the Trump administration for the first time since the summer as they continue to try to resolve a trade war, according to three people familiar with the discussions.The commitments for now fall short of the type of major structural reforms that President Donald Trump has been demanding, two of the people said, cautioning that a long road lies ahead in negotiations. One person said that talks between the world’s two largest economies are continuing and constructive. As a result, one of the people said, it raised doubts over how substantive a deal Trump could make with Chinese counterpart Xi Jinping when the two leaders meet later this month on the sidelines of the Group of 20 summit in Buenos Aires. Most of the document appeared to be a rehash of previous changes already made by Beijing, such as raising equity caps on foreign investment in certain industries, according to one person. It did not contain the sort of commitment to change industrial policies such as Xi’s “Made in China 2025” that Washington has been seeking, according to one person familiar with the discussions. Two other people familiar with the talks also said the Chinese offer was a sign of what they characterized as constructive discussions between the two sides ahead of the planned G20 meeting between the two leaders. A Treasury Department spokesman didn’t reply to an emailed request for comment. At a briefing in Beijing Thursday, a spokesman for China’s Ministry of Commerce didn’t respond to journalists’ questions on whether China had sent a list of concessions. Stocks posted modest gains in most of Asia Thursday, while the the offshore yuan rose 0.2 percent to 6.9328 per dollar.