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FX Market Asia Edition: 5 Things to Start Your Day

The trade deal waiting game continues, oil markets are on edge amid clashes in Libya, and China expands its gold reserves. Here’s what’s moving markets.

Trade Deal Closer
President Trump’s top economic adviser, Larry Kudlow, told CBS on Sunday that the U.S. and China are “closer and closer” to a trade deal, and that top-tier officials would be talking again this week via “a lot of teleconferencing.” China’s state-run Xinhua news agency earlier reported that progress was made during talks in Washington that ended Friday, though “the remaining issues are all hard nuts to crack.” The White House released a statement Friday evening saying that “significant work remains, and the principals, deputy ministers, and delegation members will be in continuous contact to resolve outstanding issues.”

Libya Has Oil Markets on Edge
Libya’s internationally-recognized government said it would start a counterattack to clear the OPEC member of forces loyal to strongman Khalifa Haftar, escalating a standoff that has the potential to rattle global oil markets. At least 35 people have been killed since the middle of last week when clashes broke out near the capital, Tripoli. Strongman Haftar’s self-styled Libyan National Army continued its push to enter the capital Sunday, ignoring a United Nations plea to end the fighting that could spark a civil war in the North African country. Oil output has surged in recent months as a fragile peace took hold, but the latest battles are a reminder that reliable crude flows can’t resume without a political solution to eight years of strife.

Market Open
Asian equity futures are higher on Monday morning after U.S. stocks ended last week up on a strong jobs report and President Donald Trump’s call for the Federal Reserve to cut rates. Treasuries rose Friday, with 10-year yields down two basis points. Oil jumped and gold was little changed. The Australian and New Zealand dollars, and the yen were all basically flat. Ahead this week, apart from waiting for a trade deal, European Union leaders meet to decide what to do about the U.K. as the Brexit impasse grinds on. Prices paid by U.S. households for goods and services probably rose in March as Fed Chairman Jerome Powell called low inflation a major challenge. Markets await minutes from the Fed’s March rate meeting and the European Central Bank’s monetary-policy decision. India holds general elections with voting in seven phases and results released on May 23. The World Bank Group and the IMF hold their Spring Meetings amid precarious global growth.

China’s Gold Rush
China expanded its gold reserves for the fourth straight month, adding to optimism that central banks globally will continue to build holdings. The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier, according to data on its website. In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December. The latest data indicate that the world’s top producer and consumer has resumed adding gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016, when the country boosted holdings almost every month. Meanwhile, its foreign-currency holdings rose for a fifth month as lower government bond yields in developed markets lifted valuations.

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