This article was sourced from Bloomberg Markets.
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UN sanctions on North Korea may delay U.S.-China trade spat, oil majors meet in Abu Dhabi, and the dollar finally delivers. Here are some of the things people in markets are talking about.
Trade-Offs
The United Nations Security Council has imposed sanctions on North Koreafollowing its test of two intercontinental ballistic missiles in July. Chinese President Xi Jinping’s co-operation with the U.S. on this likely helps cool tensions on trade between the world’s two largest economies, at least for now. China expressed confidence that the UN’s measures, which aim to crimp North Korea’s exports by roughly one-third, will bring the Kim regime to the negotiating table. However, U.S. National Security Adviser H.R. McMaster also said the administration wasn’t ruling out the possibility of a “preventative war.”
Crude Compliance
Major oil producers are slated to gather in Abu Dhabi for a meeting chaired by Russia and Kuwait to discuss why some nations have not fully complied with the deal to cut output. Saudi Arabia and Russia are expected to pressure other members of the agreement to hold up their end of the bargain. Data compiled by Bloomberg indicate that compliance by the group fell to its lowest level since January last month, though some parties are expected to argue that the sources used overestimate their production. West Texas Intermediate prices have dipped in August after touching $50 per barrel amid signs that the supply glut may persist, with U.S. production at its highest level in two years and output from OPEC climbing in July.
Rebound
The beleaguered U.S. dollar was due for a bounce. The Bloomberg Dollar Spot Index surged to its biggest advance since January on Friday, with the greenback gaining on all its G-10 peers, posting its first weekly increase in the past four. A better than expected July non-farm payrolls report helped spur the rally, while top White House economic adviser Gary Cohn further fanned the flames by pushing the administration’s tax reform agenda in TV interviews and discussing the potential for repatriation. Given the timing of the move, however – on a summer Friday – dollar bears remain reticent to read too much into the one-day gain.
Liquidity Stress
Qatar National Bank, the isolated nation’s largest lender, is in talks with international banks on different options to raise funds. Liquidity conditions have deteriorated as the standoff between the emirate and a Saudi-led alliance enters its third month, and seem poised to get even worse. Some Gulf lenders aren’t willing to extend deposits at Qatari banks when they mature, fearing reprisals from their respective governments. Israel is also shuttering Al Jazeera’s bureau in Jerusalem, with Communications Minister Ayoob Kara suggesting it might lead to better relations between the Jewish state and the Saudi-led bloc. Closing the network is among the 13 demands made by the group of Gulf nations that cut off diplomatic ties and transport ties with Qatar on June 5. Last month, Al Jazeera covered Palestinian protests at the al-Aqsa mosque, reporting which Israeli Prime Minister Benjamin Netanyahu said amounted to an incitement of violence.
Second-quarter growth from Indonesia will be the marquee event on Monday’s economic calendar in the Asia-Pacific region. Economists are calling for a rebound to 4.07 percent quarter-on-quarter after a contraction of 0.34 percent in the first three months of 2017. Consumption remains a wild card, as domestic consumer goods companies experienced a sizeable drop in net income. The nation’s central bank has hinted that it could cut rates again as pricing pressures dissipate and the rupiah remains relatively stable. Other events on deck: China’s foreign reserves probably expanded to $3.075 trillion in July the monthly change in Australian job advertisements in July as well as Japan’s leading and coincident indexes for June.
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