Sustained trade tensions could slash Asia’s economic growth by up to 0.9 percentage point in coming years, the International Monetary Fund said, urging policymakers in the region to liberalize markets to offset the fall in export sales. The IMF also warned in its twice-yearly report on the Asia Pacific region that the market rout seen in emerging economies could worsen if the U.S. Federal Reserve and other major central banks tightened monetary policy more quickly than expected. Changyong Rhee, director of the IMF’s Asia and Pacific Department, said there would be no winners in Asia from the global trade frictions, as other countries won’t be able to compensate fully for supply chain disruptions in China and the United States – the world’s top two economies. The IMF maintained its forecast that Asia’s economy will expand by 5.6 percent this year but cut its projection for next year to 5.4 percent, down by 0.2 point from April. According to IMF, the downgrade was due to the impact of financial market stress and monetary tightening in some economies, as well as the damage from the tit-for-tat tariff actions between the United States and China.
In main currencies, the EUR/USD is the primary beneficiary of broad-based dollar weakness on Friday, hitting a fresh weekly high at 1.6009 on the back of dollar selling and a positive tone in minutes of the last European Central Bank (ECB) meeting. Regarding GBP/USD, there are no macroeconomic news coming from the UK that could affect Sterling, and the kingdom has nothing scheduled for this Friday. Optimism a Brexit deal will be achieved ahead of the final divorce date remains high, getting a boost from a report indicating that UK Prime Minister May told her inner cabinet on Thursday that a historic Brexit deal was close.
In commodities, Gold losing altitude in Asia, having clocked a ten-week high of 1,226 yesterday. At press time, the safe haven yellow metal is trading at 1,218, representing a 0.20 percent drop on the day. Regarding Oil, its unstoppable fall extended into the late NA session and the barrel of West Texas Intermediate dropped below $71 for the first time since September 21.
For today there are no high impact news, however the focus can be at the G20 meetings (day 2) and the IMF meetings.