Dollar edges up, on track for weekly gains

The dollar edged up in Asian trading on Friday, poised for weekly gains after solid U.S. economic data contrasted with figures showing euro zone inflation cooling. The dollar index, which tracks the U.S. currency against a basket of six major rivals, was up 0.1 percent at 100.50 (DXY), up 0.9 percent for the week and not far from a two-week high of 100.60 hit overnight. The euro nursed losses, up 0.1 percent on the day at $1.0681 but down 1.1 percent for the week. German and Spanish consumer price data released on Thursday showed inflation slowed more sharply than expected in March as oil prices slumped, offering some respite to the European Central Bank as it faces pressure to wind down its monetary stimulus. Revised U.S. gross domestic product data on Thursday showed that U.S. fourth quarter growth slowed less than previously reported as consumer spending provided a boost that was partially offset by the largest gain in imports in two years. "The number itself wasn't great but the forward-looking indicators look pretty good," said Jennifer Vail, head of fixed-income research for US Bank Wealth Management in Portland, Oregon. "You're probably going to see some modest reaction to the softness we're seeing in the eurozone, as it looks like some of the inflation data is not as strong as initially thought," she said. "I think the reason you didn't see more substantial dollar strength is concerns on the lack of conviction that our new president had in getting ACA repealed." Republicans withdrew their bill a week ago to replace and repeal the Obama administration's Affordable Care Act (ACA) due to lack of support in Congress, raising concerns that President Donald Trump's tax reform and stimulus measures might also face legislative challenges. Trump lashed out on Thursday at Republican conservatives who helped torpedo the healthcare legislation, escalating a feud within his party. Against its Japanese counterpart, the dollar was flat on the day at 111.98 yen , up 0.5 percent for the week. Data released on Friday showed Japan's core consumer prices rose 0.2 percent in February from a year earlier, marking the fastest annual pace in nearly two years but still distant from the central bank's ambitious 2 percent target. Japan's business year ends on Friday. The dollar was on track to lose 0.6 percent against the yen for the fiscal period. Sterling edged up 0.2 percent to $1.2490 , on track for a slight gain in a week marked by volatile trading in a week in which British Prime Minister Theresa May formally triggered the Brexit process. The dollar rallied 1 percent against South Africa's rand to 13.410 , its highest since early February, after President Jacob Zuma replaced the country's finance minister. Zuma appointed Malusi Gigaba to replace Pravin Gordhan who was sacked in a cabinet reshuffle late on Thursday evening, eNCA television said.

Crude dips in Asia on profit-taking, rig count, Trump-Xi eyed

Crude oil dipped in Asia on profit taking after three days of gains and despite upbeat figures from China on manufacturing and services for March that gained more than expected in cautious trade as U.S. rig count data lies ahead and markets look to a meeting between President Donald Trump and China's Xi Jinping in Florida that is seen as high stakes on trade. On the New York Mercantile Exchange crude futures for May delivery dipped 0.34% to $50.18 a barrel, while on London's Intercontinental Exchange, Brent eased 0.41% to $52.91 a barrel. China's semi-official manufacturing PMI rose to 51.8, the China Federation of Logistics & Purchasing (CFLP) said Friday, beating the expected 51.6 level and releasing the figures one day ahead of the normal first of the month release and ahead of the Caixin PMI figures. Earlier in Japan, household spending for February slumped 3.8% year-on-year, compared to a 1.7% decline seen. On a monthly basis however it rose 2.5%, beating the expected 0.4% rise. Separately, national core CPI fell 0.2% for February year-on-year as expected, while unemployment dipped to 2.8% from 3.0%. Provisional industrial production for February rose 2.0% month-on-month, beating the expected 1.2% increase. Market participants turn attention to Baker Hughes rig count, due to be released on Friday at 13:00 EDT. Data last weekrevealed that the number of active U.S. rigs drilling for oil rose by 21, the tenth weekly increase in a row. That brought the total count to 652, the most since September 2015. The White House said Trump would host Xi next Thursday and Friday at his Mar-a-Lago retreat in Florida. It said Trump and his wife, Melania, would host Xi and his wife, Peng Liyuan, at a dinner next Thursday. Overnight, crude futures settled higher on Thursday, amid optimism that an OPEC led production cut deal would be extended beyond June, following bullish comments from Kuwait oil chief Essam al-Marzouq. Crude futures settled above the key $50-level, as crude prices hit a three-week high of $50.45, after Kuwait oil minister Essam al-Morzouq said his country was among several nations that supported the idea of extending the current deal between OPEC and non-OPEC members beyond June. In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day (bpd) in an effort to combat the oversupply issue that has pressured prices over the last two years. OPEC members have been high compliance with the deal to cut supply, which came into effect in January this year, while a ramp up in U.S. production of shale and crude has weighed on oil prices. Despite, a dip in crude inventories on Wednesday, crude stockpiles remain at record highs – at over 520 million barrels, current crude supplies are up 6% over the past year. Rising U.S. crude stockpiles sparked concerns that OPEC may struggle to drain the glut in supply.

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Trump to seek tariff 'snap-back' provision in NAFTA revamp: letter

The Trump administration will seek changes to the North American Free Trade Agreement allowing it to reimpose tariffs if a flood of imports from Canada and Mexico causes "a threat of serious injury" to U.S. industry, according a draft document sent to Congress. The administration also will seek to eliminate a requirement in the 23-year-old trade deal that anti-dumping and anti-subsidy disputes be settled via a special dispute panel. Some U.S. industries including lumber have complained that the mechanism is ineffective in stopping unfair subsidies. The objectives are contained in a draft notification letter circulated by the U.S. Trade Representative's office to members of Congress for review. The letter, seen by Reuters, is part of the legal process required to launch negotiations to revamp the NAFTA. President Donald Trump called NAFTA a "disaster" throughout the 2016 election campaign, but the plan outlined in the letter would keep many of its provisions in place, including a settlement system for other disputes that circumvents local courts. "The persistent U.S. deficit in goods trade with Canada and Mexico demands that this administration take swift action to revise the relationship to reflect and respond to new 21st century challenges," Acting USTR Stephen Vaughn said in the letter, which is subject to revisions before it is finalized. Another draft objective says the administration wants “to establish rules that require government procurement to be conducted in a manner that is consistent with U.S. law and the administration’s policy on domestic procurement preferences,” This could allow for Trump's "Buy American" plan, but also cause U.S. companies to lose business in Mexico and Canada. The document also calls for protections of digital trade and commerce, tougher intellectual property enforcement and requirements that state-owned companies operate in a commercial fashion. The draft proposal is subject to revision, and the administration must give Congress 90 days’ notice under trade law before beginning formal NAFTA renegotiations. Trump has long vilified NAFTA as draining millions of manufacturing jobs to Mexico, and he has vowed to quit the trade pact unless it can be renegotiated to shrink U.S. trade deficits.

U.S. natural gas futures stay lower after weekly storage data

U.S. natural gas futures declined on Thursday, holding on to losses after data showed that natural gas supplies in storage in the U.S. fell broadly in line with market expectations last week. U.S. natural gas for May delivery shed 3.4 cents, or around 1.1%, to $3.197 per million British thermal units by 10:35AM ET (14:35GMT). Futures were at around $3.196 prior to the release of the supply data. It settled higher for the second day in a row on Wednesday after touching its strongest January 31 at $3.253 The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. declined by 43 billion cubic feet in the week ended March 24, compared to forecasts for a drop of 42 billion. That compared with a withdrawal of 150 billion cubic feet in the preceding week, a decline of 25 billion a year earlier and a five-year average drop of 27 billion cubic feet. Total natural gas in storage currently stands at 2.049 trillion cubic feet, according to the U.S. Energy Information Administration, 17.1% lower than levels at this time a year ago but 12.2% above the five-year average for this time of year. Meanwhile, traders continued to monitor shifting early-spring weather forecasts. Weather systems will track across the country the next several days with rain, snow, and thunderstorms, but with limited cold air as they play out spring-like, according to forecasters at NatGasWeather.com. There remains potential for a bit colder system from April 7 through the 10th and will be dependent on how a weather system tracking over the southern U.S. phases with a cold blast over the Midwest. Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts on early-spring demand. The heating season from November through March is the peak demand period for U.S. gas consumption. Nearly 50% of all U.S. households use gas for heating.