Currency markets were little changed in Asia’s late morning as traders remained both unsettled and uncertain on Monday after signs that the U.S.-China trade talks that took place last week offered little progress for the lingering trade war between the two economic powerhouses. The dollar index was down 0.04 percent as of 11:34 a.m. HK/SIN, with the steepest moves coming in the form of a strengthening of the British pound as traders refocused on optimism that the Brexit may still occur by the end of the month if critical negotiations this week are successful. The pound was fetching $1.2616 just before noon in Hong Kong, up 0.08 percent. The euro was up 0.03 percent against the greenback to $1.1031, while the Canadian dollar remained unchanged against its U.S. counterpart.
The biggest stumbling block to a smooth Brexit is the border dispute between Ireland and Northern Ireland which belongs to the United Kingdom. UK Prime Minister Boris Johnson has been working tirelessly on finding a solution to this issue, and both traders and political analysts remain cautiously optimistic that a deal may be reached by the October 31 Brexit date.
Stock Markets Seek Direction
Global stock markets were trading mixed on Tuesday after Wall Street indexes snapped their three-day winning streak on Monday, with all three benchmark indexes ending lower on concerns that last week’s high-level trade negotiations in Washington were not successful. The next round of tariffs is expected to be implemented on December 15th is no deal is reached before then. Few details were released since last week’s meetings, giving traders little indication as to whether a deal is within reach, though President Trump has said that the two sides reached a “fundamental agreement in principle,” and Treasury Secretary Steven Mnuchin told CNBC that he expects a deal before the next trade deadline.
Also keeping markets subdued is earnings season in the U.S. which will start later on Tuesday and is expected to show the first serious signs of economic distress in the U.S. According to Reuters, U.S. banks are expected to show a 1.2 percent decline in earnings. If this prediction proves accurate, it would be the first year-on-year drop in three years. Earnings in other sectors are also expected to decline, largely due to the trade war which has impacted both sales and manufacturing.
On Tuesday morning Japan’s Nikkei 225 saw the biggest gains, up 1.72 percent. South Korea’s Kopsi gained 0.06 pecent, while most other benchmarks headed lower. Both of China’s benchmarks were in the red, as was Hong Kong’s Hang Seng Index which eased 0.10 percent.