Business News

CCTV Script 18/01/17


This is the script of CNBC's news report for China's CCTV on January 18, Wednesday.

Welcome to CNBC Business Daily.

The British pound spiked around 3 percent against the U.S. dollar on Tuesday, after Prime Minister Theresa May outlined her plan for a clean break between the United Kingdom and the European Union.

As a result, sterling was on track for its best one-day gain since 2008. In her speech, May said the U.K. government will put the Brexit deal it reaches with the EU to a parliamentary vote.

"The key takeover was that any deal will need parliamentary approval which means it could get watered down, lessening the blow from a nasty divorce," said Peter Ng, senior FX trader at Silicon Valley Bank, in a note. "May said that she will try to get the best deal possible for the UK but is prepared to walk away from the single market if she doesn't get what she wants."

The pound had taken a beating heading into May's speech, having briefly broken below $1.20 on Sunday.

Meanwhile, dollar has been week since the beginning of 2017.

President-elect Donald Trump's shock comment that the dollar is too strong suggests the U.S. is about to declare as dead a two-decade policy of publicly favoring a strong currency.

Trump's remarks also took a shot at one of the most crowded trades on the planet - long wagers on the dollar. That trade has been a bet that Trump's policies will reflate the economy, causing interest rates and the greenback to rise. But that dollar move is at odds with building a more powerful American manufacturing base, because a strong dollar makes exports more expensive for foreign buyers.

The dollar index gained as much as 6 percent after the election but began retreating in early January and is now up only about 3 percent since Nov. 8. The dollar index was down about 0.7 percent Tuesday on Trump's comment and on pressure from the pound and euro.

"This is the first time we have a president-elect say the dollar has gone too far," said Marc Chandler, chief foreign exchange strategist at Brown Brothers Harriman. "He's saying things and doing things that no president has ever done before."

Presidents in recent history have refrained from talking the currency up or down, and Chandler says going back to Clinton Treasury Secretary Robert Rubin, the policy has been for a strong dollar. Even when the dollar's strength created headwinds, administrations have stood by it, at least verbally.

Trump said the dollar was already "too strong," and he pointed a finger at the Chinese currency. "Our companies can't compete with them now because our currency is too strong. And it's killing us," he told the newspaper.

Markets have been wrestling with how much to believe the protectionist rhetoric from Trump and some members of the incoming administration. Trump has said he wants to impose tariffs, and specifically he has repeatedly targeted cars produced outside the U.S. by both U.S. and foreign automakers.

Chandler said there are other questions raised by Trump's comments, which are at odds with a number of his appointees.

CNBC's Qian Chen, reporting from Singapore.

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