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Bloomberg.com — As if emerging-market investors didn’t have enough to worry about — with political flare-ups and central-bank surprises galore — the dollar’s strength is poised to pile further pressure on currencies from the real to the rand.

As the dollar clocked up its longest rally since 2015, the MSCI Emerging Markets Currency Index closed on Friday below its 200-day moving average for the first time in more than a year, heralding more losses. The gauge slid 1.3 percent in the week, its worst performance since 2016. Not one developing-nation currency rose last week as the dollar advanced, with U.S. 10-year yields closing above 3 percent the last five days.

For GAM UK Ltd.’s Paul McNamara, nothing worries him more than the strength of the dollar. “The rest is noise,” the London-based fund manager said.

What’s more, the negative correlation between the dollar and developing-nation currencies is deepening.

To minimize the potential damage from the U.S. currency’s revival, McNamara is using Canada’s dollar and the euro to invest in emerging-market assets. A Bloomberg currency index that measures carry-trade returns from eight emerging markets, funded by short positions in the dollar, has declined to the lowest in a year.

“Unless the fresh set of U.S. data scheduled next week is seriously disappointing, EM currencies will struggle to trim their recent losses against the dollar, which is supported by rising yields on U.S. Treasuries,” said Piotr Matys, a strategist at Rabobank in London, said last week. Markets expect the Federal Reserve to raise rates at least twice more this year, he added.

The combination of higher debt levels and share of debt denominated in foreign currency means many emerging markets are now more exposed to dollar appreciation than in 2009, amid signs the robust growth in developing economies may be slowing, the Institute of International Finance said in a May 17 note.

While the U.S. Treasury will sell some of its largest offerings since 2010 this week, a slew of Fed speakers may reiterate plans for gradual rate increases.

The selloff in developing nation currencies is hurting other assets.

Emerging-market local-currency government bonds declined for a sixth week, the worst run since 2016. Developing-nation stocks retreated 2.3 percent last week.

What will central banks do?
Argentina’s central bank will probably hold its benchmark rate steady this week after raising it to 40 percent earlier this month to defend the peso. The Argentine currency has plunged almost 20 percent in the past month, forcing the government to spend a 10th of its foreign-exchange reserves to defend it and seek help from the International Monetary Fund.

The Bank of Korea is expected to keep its key interest rate on hold at 1.5 percent on May 24. Odds are increasing against further policy normalization after BOK Governor Lee Ju-yeol sounded caution on the economy, Prakash Sakpal, a Singapore-based economist at ING Groep NV, wrote in a May 17 note. Governor Lee said Thursday it’s difficult to remain optimistic even though the economy has grown steadily, given uncertainties over the U.S.-China trade dispute and the impact of monetary policy normalization in major countries.

His remarks followed the latest rhetoric from North Korea, which has threatened to pull out of a proposed summit between its leader Kim Jong Un and U.S. President Donald Trump in June if it’s pressured to surrender its nuclear weapons. South Korean President Moon Jae-in plans to visit Washington and meet with Trump in advance of the talks.

Hungary’s central bank will hold a rate meeting on Tuesday, where investors will be focusing on any reaction to the recent market volatility. Policy makers have used a variety of unconventional tools to lower borrowing costs since August, but the selloff had reversed most of the impact and there’s growing skepticism over how long the bank can stick to the measures.

Central banks in South Africa, Ghana, Nigeria, and Ukraine will also decide on policy this week.

Let’s Meet
The roster of big-name investors and chief executive officers attending Russia’s annual St. Petersburg International Economic Forum has withered since the annexation of Crimea, and this year’s event takes place in the shadow of the toughest U.S. sanctions to date. The run-up has already been marked by the U.S. ambassador to Moscow axing his planned welcome speech at a U.S.-Russia business panel.

Still, with a raft of top local officials speaking at the event, traders will be keeping a close eye on the event. The forum runs May 24-26. On Friday, Bloomberg News Editor-in-Chief John Micklethwait will moderate a panel with President Vladimir Putin, French President Emmanuel Macron and Japanese Prime Minister Shinzo Abe.

Meanwhile, foreign ministers from the Group of 20 countries gather in Argentina for their annual meeting. Officials from the U.K., Canada, Mexico, Japan, China, Australia and Germany are due to attend.

Trade
Global trade tensions are showing some signs of improvements after the Trump administration and China called an economic truce as both parties agreed to put tariffs on hold while they execute a framework to rebalance trade.

China and the U.S. agreed to “substantially” reduce the U.S. trade deficit in goods with China, which reached $376 billion last year. Beijing promised to “significantly” increase purchases of U.S. goods and services. But there was no dollar figure attached, despite assurances by the White House that Beijing would cave to its demand for a $200-billion annual reduction in the goods shortfall.

Politics

Venezuelan bonds may come under pressure when markets reopen Monday after Sunday’s presidential vote in which incumbent Nicolas Maduro won a second six-year term amid dubious electoral conditions. The result continues two decades of strongman rule by the late socialist president Hugo Chavez and Maduro, 55, his hand-picked successor. The Latin American economy has deteriorated to the point that electricity and running water are luxuries and malnutrition is rampant.

The nation’s benchmark sovereign bonds, which are leading emerging-market returns this year, fell to their lowest in a week ahead of the election.

Meantime in Ecuador, the focus will be on newly appointed Finance Minister Richard Martinez and his proposal to get the nation’s ballooning debt under control.

Economic Data
Poland presents another batch of April data, including industrial output, PPI, retail sales, M3 money supply and unemployment. The Finance Ministry will also hold its sole regular bond auction this month, planned for Thursday and initially flagged at 3 billion ($822 million) to 6 billion zloty.

In Brazil, the Finance Ministry is expected to revise down its yearly growth estimate, currently at 3 percent, following a series of disappointing economic indicators in the first quarter. Investor anxiety, as measured by the real’s one-month implied volatility, rose to the highest in about a year.

Finally, Taiwan is due to report gross domestic product growth data for the first quarter on May 25 after data Monday showed Thailand’s economy grew faster than economists estimated last quarter as exports and tourism rose.

— With assistance by Alec McCabe

Finmarket.ru-As a result of trades on May 18, the cost of the July contract for Brent crude on the ICE Futures exchange in London fell by $ 0.7 (1%) and amounted to $ 78.51 per barrel.

June futures for WTI on the New York Mercantile Exchange NYMEX fell by $ 0.21 (0.3%) to $ 71.428 per barrel.

Today, oil prices are rising.

July futures for Brent crude by 7:53 Moscow time increased by 58 cents (0.7%) – to $ 79.09 per barrel.

Quotations of the June contract for oil WTI increased by 54 cents (0.8%) and amounted to $ 71.82 per barrel.

Bloomberg.com — Most Asian stocks gained Monday as U.S. equity futures jumped in the wake of news that the Sino-American trade war is on hold for now. Treasury yields nudged higher, taking the dollar with them.

Equity benchmarks rose in Hong Kong, China and Korea, while they fluctuated in Japan and Australia. The S&P 500 Index contracts gained 0.6 percent. Oil futures climbed. U.S. Treasury Secretary Steven Mnuchin said the U.S. was “putting the trade war on hold,” amid progress in talks with China. Stocks had closed lower Friday and Treasury yields dropped under 3.1 percent amid mixed signals on trade. Safe-haven assets like the yen and gold declined.

“The trade talks over the weekend suggest that real trade-war outcomes are very unlikely,” Robert Mead, co-head of Asia-Pacific at Pacific Investment Management Co., said in a Bloomberg Television interview. “This seems to suggest that global trade stays healthy — we don’t have to worry too much about that.” Mead said the dollar rally “probably has a bit further to go.”

Investors this week will be keeping a close eye on the minutes of May’s Federal Reserve meeting, to be released Wednesday, along with preliminary purchasing manager indexes in the euro zone. Geopolitics remains in focus as South Korea’s president visits Washington to discuss North Korea and Brexit negotiations resume in Brussels.

Elsewhere, emerging-market currencies continued to come under pressure. The Indonesian rupiah weakened as an interest-rate hike last week failed to stem a sell-off, and the central bank vowed to continue to intervene in the forex and bond markets. The Malaysian ringgit dropped for a ninth day to be on course for the longest stretch of losses since November 2016. The euro steadied near a five-month low as Italy’s two populist leaders agreed on a prime minister and are set to propose a cabinet as early as Monday.

Investing.com – The European Commission, following the agreement of the EU leaders at an informal meeting in Sofia, has taken steps today to preserve the interests of investments of European companies in Iran and demonstrated the commitment of the European Union to the Joint Comprehensive Action Plan (CAPA), the Brussels communiqué issued in Brussels.
“A formal process has been launched to revitalize the Blocking Statute by updating the list of US sanctions on Iran falling within its scope.The blocking statute prohibits EU companies from adhering to the extraterritorial actions of US sanctions, allows companies to reimburse losses arising from such sanctions on behalf of them, and annuls the influence in the EU of any foreign judicial decisions based on them.The goal is to take action before August 6, 2018, when the first batch of US sanctions comes into force, “in the EU message said.

The European Commission has launched a formal process to remove obstacles for the European Investment Bank (EIB) to finance activities outside the EU in Iran, the communiqué notes. “This will allow the EIB to support the EU investments in Iran and can be useful, in particular, for small and medium-sized enterprises.” All relevant rules and procedures will be applied to individual financial transactions, “explained in Brussels.

“In Sofia, we saw a demonstration of European unity: while the Iranians are complying with their obligations, the EU will, of course, adhere to the agreement it was the architect of, an agreement that was unanimously ratified by the UN Security Council and which is of the utmost importance for preserving peace in the region and in world “, – the words of the chairman of the European Commission Jean-Claude Juncker are given in the document.

At the same time, he noted that the American sanctions will not remain without consequences.

“Therefore, we, the European Commission and the EU, have a duty to do everything possible to protect our European business, especially small and medium-sized enterprises,” J. Junker said.

Investing.com – A Chinese official delegation on a visit to Washington allegedly suggested that US President Donald Trump increase purchases of a number of American goods in order to reduce a significant imbalance in foreign trade, reducing the Chinese surplus by $ 200 billion, according to US media.
However, the representative of the Chinese Foreign Ministry doubted that these reports correspond to reality: in any case, the ministry is not aware of such proposals.

Earlier, the US side demanded to reduce China’s surplus in foreign trade with the US by just $ 200 billion by 2020 from $ 375 billion in 2017, but Beijing did not agree with such requirements.

Yesterday D. Trump said that China was “very spoiled,” and expressed doubts about the success of the visit of the Chinese delegation to Washington.

On Friday, the PRC officially announced the completion of an anti-dumping investigation against imported sorghum from the US, as the US ferghana duties imposed on American sorghum in the amount of 178.6% “do not meet the interests of the society.”

A number of economists call the US demands for a decrease in China’s surplus in their trade relations unrealistic, since the current situation is a consequence of fundamental economic factors. In addition, they suggest a more active interference of the Chinese authorities in market processes, since to increase purchases of American goods, it will be necessary to give appropriate orders to companies, whereas now the PRC is pursuing a course to reduce state participation in the economy.

NEW YORK, May 18 (Reuters) – Wall Street ended Thursday’s volatile trading with a decline due to investor concerns about growing trade tensions and rising oil prices.

The comments of US President Donald Trump that China “became very spoiled by trade” made him question his desire to avoid a trade war between the two largest economies in the world, increasing the excitement of investors towards the start of the second round of talks between Washington and Beijing.

Oil prices rose to a maximum in three and a half years against the background of instability in the Middle East, which allows to expect a reduction in oil supplies. The S&P energy index rose 1.3 percent, showing the largest increase in the main S&P 500 sectors.

The Dow Jones index closed the session down by 0.22 percent to 24,713.98 points, the S&P 500 index – by 0.09 percent to 2.720.13 points, the Nasdaq Composite index – by 0.21 percent to 7.382.47 points.

Shares of the so-called defense sectors were among outsiders among the 11 main sectors of the S&P 500. Sensitive to changes in interest rates, the telecommunications sector, real estate sector and shares of electric power companies declined amid rising yields of the US state bonds.

The shares of Cisco Systems (NASDAQ:CSCO) exerted the greatest pressure on the S&P 500 and Nasdaq, down 3.8 percent, despite the fact that the company’s profits and revenues exceeded forecasts. According to Citigroup’s (NYSE:C) research note, investors feel that the technology company is losing market share.

The technological sector of the S&P 500 fell by 0.5 percent.

Investing.com – Consumer prices excluding fresh food in Japan, the key inflation indicator, monitored by the Central Bank of the country, in April 2018 grew by 0.7% in annual terms, according to the Ministry of Internal Affairs and Communications of the country.

The rise slowed from the March level of 0.9% and was weaker than the experts expected (0.8%).

The index excluding food and energy carriers slowed last month to 0.4% from 0.5% in March.

“The Bank of Japan’s 2% inflation target is still out of reach,” said Capital Economics analyst Marcel Tielan.

The overall annual inflation rate in Japan in April was 0.6%, down from 1.1% in March.

Prices for food products in the country rose last month by 0.7% compared to the same period a year earlier, while fresh products fell 1.5%.

Clothing and footwear went up by 0.1%, everyday goods – fell by 1.5%.

Experts note that the Japanese Central Bank is likely to continue to adhere to the current policy, maintaining a negative interest rate on deposits and continuing large purchases of government securities. Inflation data is not so weak that it could push the Bank of Japan to increase incentives, they say.

The rise in oil prices in recent years is likely to support inflation, as it contributes to the increase in the cost of gasoline and consumer goods, Dow Jones quoted the representative of the Japanese Ministry of Internal Affairs and Communications.

Statistics, published earlier this week, pointed to the first decline in the country’s economy since the end of 2015. Japan’s GDP in the first quarter of 2018 declined by 0.6% in annual terms after an increase of 0.6% in the previous quarter.

Investing.com – The euro rose against the US dollar on Friday.

At the time of publication of this material, EUR/USD is trading at 1.1811, gaining 0.14%.

We believe that the support is now at 1.1762, the minimum of the medium, and the resistance is likely to perform the level of 1,1998 – the maximum of Monday.

Meanwhile, the euro rose against the British pound and the Japanese yen. The EUR/GBP pair, gaining 0.14%, reached the level of 0.8738, and EUR/JPY, having risen by 0.23%, reached the level of 130.95.

Investing.com – Quotes of gold futures fell during Asian deals on Friday.

At COMEX, a division of the New York Mercantile Exchange, gold futures for delivery in June are traded at a price of $ 1.288.50 per troy ounce, down 0.07% as of this writing.

The minimum of the session was a mark of $ per troy ounce. At the time of writing, gold found support at $ 1.284.30 and resistance at $ 1.319.90.

Futures on the USD index, showing the US dollar to the basket of the six major currencies, decreased by 0.04% and is traded at around $ 93.35.

As for other goods traded on COMEX, silver futures for delivery in July fell by 0.28%, reaching $ 16.435 per troy ounce, while copper futures for delivery in July increased by 0.13%, reaching the level of 3.087 dollars per pound.