Economy

SINGAPORE (Reuters) – The dollar was parked below recent peaks on Tuesday, as a three-week rally faded and traders waited on economic data to figure on whether it’s warranted to push the dollar up any further.Strong U.S. labour data and sticky inflation have raised U.S. rate expectations and supported the dollar’s rally so far this month – Tuesday’s European and U.S. manufacturing data and Friday’s core PCE price index will guide the next steps.After a quiet Monday thanks to the President’s Day holiday in the United States, the dollar stood steady at 132.24 yen and $1.0687 per euro, with the common currency finding strong support above $1.06.The U.S. dollar index has climbed three weeks in a row for a gain of about 1.7% through February so far, but has steadied at 103.86, down from a six-week high of 104.67 hit on Friday. “Friday’s inability of euro/dollar to push lower after breaking below $1.0650 rather sums up the FX market for me,” said Societe Generale (OTC:SCGLY) strategist Kit Juckes.”There are two reasons why the dollar’s bounce is getting stuck,” he added, noting that European and U.S. growth forecasts are converging and the difference in relative rate expectations is narrowing.”I suspect that further significant dollar strength will require the Fed Funds futures market to start pricing in a 50 basis point rate hike in March,” he said.Fed funds futures currently imply about a 16% chance of that, while in Europe a 50 bp hike in March is all but priced in. Elsewhere currency markets were broadly steady.Gains in oil prices and a steady Chinese yuan gave support to the Australian dollar which sat at $0.6920 as traders awaited the release of minutes from the Reserve Bank of Australia’s February meeting.The New Zealand dollar held at $0.6259 ahead of a central bank meeting on Wednesday. Markets are pricing a 50 bp hike to bring New Zealand’s benchmark interest rate to 4.75% and are also weighing the economic impact of Cyclone Gabrielle.”As markets contemplate the cost of rebuilding and the impact that’s likely to have on inflation, insurance flows and infrastructure spending, it’s quickly becoming a potential driver of sustained New Zealand dollar strength,” ANZ analysts said.Sterling was steady at $1.2042. Overnight the Swedish crown jumped as inflation turned sticky and central bank minutes showed policymakers prepared to keep hiking.Bitcoin found support after Hong Kong’s markets regulator published proposed rules to licence crypto exchanges, seen as a step in the direction of encouraging the city’s development as a crypto hub.========================================================Currency bid prices at 0007 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.0681 $1.0685 -0.04% -0.32% +1.0687 +1.0681 Dollar/Yen 134.3150 133.9500 +0.00% +2.07% +134.3550 +0.0000 Euro/Yen 143.47 143.46 +0.01% +2.27% +143.5300 +143.4500 Dollar/Swiss 0.9233 0.9232 +0.03% -0.13% +0.9234 +0.9230 Sterling/Dollar 1.2031 1.2040 +0.02% -0.42% +1.2043 +1.2040 Dollar/Canadian 1.3458 1.3453 -0.01% -0.72% +1.3458 +1.3452 Aussie/Dollar 0.6904 0.6911 -0.10% +1.28% +0.6915 +0.6904 NZ Dollar/Dollar 0.6249 0.6253 -0.04% -1.57% +0.6261 +0.6250 All spotsTokyo spotsEurope spots Volatilities Tokyo Forex market info from BOJ More

US curbs on China’s access to advanced technology are killing its viability as a manufacturing base for exports, according to the head of Japan’s Kyocera, as one of the world’s largest makers of chip components shifts its production elsewhere and invests heavily in facilities at home.Hideo Tanimoto, president of a company that is an important part of the chip supply chain, made his stark assessment as he leads an aggressive investment strategy for Kyocera that includes construction of its first factory in Japan in nearly two decades. “It works as long as [products are] made in China and sold in China, but the business model of producing in China and exporting abroad is no longer viable,” Tanimoto told the Financial Times. “Not only have wages gone up, but obviously, with all that’s happening between the US and China, it’s difficult to export from China to some regions.”In October, the US announced export controls that will severely hamper efforts by Chinese companies to develop cutting-edge technologies. Last month, Japan and the Netherlands also agreed with the US to restrict exports of chip manufacturing tools to China. Kyocera’s products include phones, printers and solar panels and it holds a 70 per cent global market share in ceramic components for chip manufacturing equipment. Tanimoto said US export controls were part of the reason the company cut its full-year operating profit forecast this month by 31 per cent.“If chip equipment makers stop shipments to China, our orders will be somewhat affected . . . They are now even [being] asked not to ship their non-cutting-edge tools,” Tanimoto said. Kyocera had already found itself increasingly caught up in the trade dispute between the world’s two largest economies.In 2019, it relocated the manufacturing of its copiers for the US market from China to Vietnam to avoid tariffs on China imposed by the Trump administration. It also transferred the production of in-vehicle cameras for the US from China to Thailand. Tanimoto said it would now be nearly impossible to produce hardware in China without access to the chips technology affected by the tightened regulations, although the country may still have a competitive edge in software and artificial intelligence.For decades, the Kyoto-based manufacturer has taken a conservative stance towards investments to focus on generating profits. But under Tanimoto, who took over as president in 2017, the company has shifted gears to explore new growth opportunities, spending ¥62.5bn ($464mn) to build a facility for semiconductor packaging at its plant in Kagoshima in southern Japan.In November it pledged to nearly double capital spending over the next three years to ¥900bn, to expand production of chip-related components and capacitors used in smartphones and other products. Its first domestic plant built in nearly 20 years will be an electronics components factory in Nagasaki, planned to begin operations in 2026.

Investors have welcomed Kyocera’s bolder spending plans but have also called on the company to improve its corporate governance and return on equity by selling its 15 per cent stake in telecoms business KDDI, which was started by the group’s founder Kazuo Inamori. He died in August. Tanimoto said the company would not reduce its stake in KDDI, which is worth ¥1.4tn, and would instead use it as collateral to borrow ¥500bn for its acquisition plans in electronic components.“If you sell it, you will be taxed quite significantly as it is a capital gain. If you borrow money, using it as collateral, you can borrow at a lower interest rate and still receive dividends,” said Kyocera’s president. “Dividends are much higher than interest rates . . . [Keeping the stake] can accelerate the growth of our company.”In response to shareholder calls to offload Kyocera’s underperforming businesses such as smartphones, Tanimoto said the company would first focus on generating profits by shifting to selling its devices to businesses rather than consumers. “I believe we can get back to double-digit profits after pivoting to business use,” Tanimoto said. “I told our team to achieve it in the next three years for the survival of our communications business.” More

Federal and state governments’ tax revenue increased to a total of 58.03 billion euros ($62.01 billion), according to the ministry’s monthly report.Germany needs a turnaround not only with respect to security policy, but also in economic and financial terms, with a focus on strengthening growth, the finance ministry said in the report. The finance ministry will modernize Germany’s tax law with legislative initiatives that foster growth, according to the ministry’s report. Draft legislation will focus on making taxation simpler and more transparent, the report added. For 2023, experts have forecast tax revenues will increase to 857.2 billion euros, up 5.2% from the previous year, according to the report.($1 = 0.9358 euros) More

Campaigners have called on the UK government to freeze household energy costs beyond the end of March as falling wholesale prices sharply reduce the amount of government subsidy needed to hold bills steady.The average UK household bill is set to rise to £3,000 per annum between April and June under the UK’s energy price guarantee (EPG) scheme, up from £2,500 today, as chancellor Jeremy Hunt has argued that the government cannot afford to keep subsidising bills at the lower level.Households face even steeper increases as the government’s energy bill support scheme, which shaved an additional £400 off every household payment, is set to end.But the latest forecasts for UK household energy costs show the regulator’s price cap — which sets the unsubsidised price of energy for the majority of homes — will not rise as much as previously feared, reaching around £3,300 in April and dropping below £2,200 from June.Late last year it was predicted that it would rise well above £4,000 as energy prices soared.Cornwall Insight, a consultancy, estimated on Monday that the additional cost to the government of freezing bills at £2,500 between April and June would be £2.6bn, or less than 10 per cent of the total cost of the EPG that has been in place since October.“The greater the disparity between the cost of the two schemes the higher the governmental expense,” Cornwall Insight said.“If the EPG were to increase to £3,000 as planned, the estimated cost [to the government] would be £26.8bn while if it were to remain at £2,500, the estimated cost would be £29.4bn.”Investec, the investment bank, said on Monday that its “final” forecast for the price cap in the April to June period was £3,332, while Cornwall Insight forecast £3,294.

Both have a strong record of accurately predicting the cap and see it falling to below £2,200 in June — freeing the government from subsidies for the average household entirely — as a slide in wholesale gas prices of almost 65 per cent since early December starts to feed through. The official price cap announcement from regulator Ofgem is due on February 27. Ed Davey, leader of the Liberal Democrats, said the Conservative party would demonstrate it was “out of touch” if it let bills rise as households struggle with the cost of living crisis.“It would be irresponsible and deeply unfair for the government to increase people’s energy bills now,” Davey said. Simon Francis of the End Fuel Poverty Coalition said the government should have additional funds available, with wholesale gas prices falling by almost 80 per cent since their peak in August and 65 per cent since early December.“The government has not had to spend as much as they thought they were going to,” Francis said. “The money is presumably still there and they should be able to help people even further.”Before the energy crisis, the average household bill for homes with normal gas and electricity usage was generally around £1,200 under the regulator’s price cap, before Russia restricted gas supplies to Europe.HM Treasury has so far been cautious on the prospect of extending additional support to keep average bills at £2,500, warning that the government would be on the hook if wholesale prices were to quickly rebound. “Prices are volatile and can increase as fast as they fall,” a Treasury spokesperson said. “If prices return to their late-August level, the government would need to borrow an extra £42bn and potentially increase taxes.”Officials added proceeds from the windfall tax on energy companies were also likely to undershoot earlier predictions given the fall in wholesale prices, offsetting some of the benefit to the government. “It would be irresponsible to plan fiscal policy on such volatile prices,” one official said.Meanwhile, the government has appointed Alison Rose, chief executive of banking group NatWest, to co-chair its Energy Efficiency Taskforce, set up recently to cut Britain’s power consumption.The task force will aim to accelerate boiler upgrades, household insulation and business efficiency measures to try to cut the country’s energy use by 15 per cent within seven years.The appointment will be confirmed by Hunt on Tuesday at a meeting with nearly 100 representatives of UK-based green companies. Lord Callanan, a junior business minister, will be the other co-chair. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.Flash purchasing manager index reports from Japan and Australia on Tuesday will give an insight into how two of Asia’s biggest economies are performing, as trading volumes return to normal after U.S. markets were closed for Presidents Day.The U.S. market holiday on Monday allowed the spotlight to shift to geopolitics – President Joe Biden made an unannounced visit to Kyiv ahead of the one-year anniversary of Russia’s invasion of Ukraine, U.S. Secretary of State Antony Blinken warned China of consequences should it provide material support to Russia and North Korea fired more missiles. Plenty to chew on and, along with the startling upward repricing of U.S. interest rate expectations, perhaps more likely to fray investors’ nerves than soothe them. Or not – global stocks ticked higher on Monday and Chinese stocks had their best day since November on economic reopening optimism, with the blue-chip CSI300 Index surging 2.5%. The economic calendar and market trading grind back into gear on Tuesday, kicking off in Asia with the flash Aussie and Japanese PMIs for February. Graphic: Japan composite PMI vs GDP – https://fingfx.thomsonreuters.com/gfx/mkt/dwpkdzgdkvm/JapanPMI.jpg Manufacturing activity in Japan has contracted for three months in a row and service-sector activity has expanded for five months, meaning overall economic activity grew in January for the first time in three months.This is an important week for Japan. Consumer price inflation figures on Friday are expected to show a rise in the annual rate to a new 41-year high above 4%, and incoming Bank of Japan Governor Kazuo Ueda testifies before parliament also on Friday. Graphic: Australia manufacturing PMI – https://fingfx.thomsonreuters.com/gfx/mkt/zjvqjyqjapx/AUSPMI.png The pace of growth in Australian manufacturing, meanwhile, has slowed for seven straight months and the sector is on the cusp of contracting for the first time since May 2020. Services and overall business activity as measured by the PMIs have been contracting for four months. There appears to be little hope of relief on the interest rate front, however. Reserve Bank of Australia Governor Philip Lowe last week repeated his view that further rate rises in coming months are needed and said the pain was worth bearing to bring inflation down.The monetary policy stance in Beijing is far less hawkish. The People’s Bank of China on Monday kept benchmark lending rates unchanged for a sixth month, leaving the one-year loan prime rate at 3.65% and the five-year rate at 4.30%. The economy seems to be rebounding from its zero-COVID restrictions, but there may be more monetary easing to come.China’s government will announce key growth targets for the year at the National People’s Congress which is scheduled to begin on March 5. This may be a good time to deliver growth-boosting rate cuts or ramp up liquidity injections even more.Here are three key developments that could provide more direction to markets on Tuesday:- Japan flash PMIs (February)- Australia flash PMIs (February)- Reserve Bank of Australia policy meeting minutes (By Jamie McGeever; Editing by Josie Kao) More

US president Joe Biden made a surprise visit to Kyiv on Monday in a show of American commitment ahead of the first anniversary of Russia’s invasion of Ukraine.On a trip shrouded by secrecy for security reasons after months of planning, Biden announced $500mn in new military aid.“I’m here to show our unwavering support for the nation’s independence, sovereignty and territorial integrity,” Biden said, vowing to stand with Ukraine for “as long as it takes”.The stopover came at a pivotal moment in the war, as western nations discuss how far to go in arming Kyiv and as the 80-year old president gears up for a possible re-election campaign.Ukraine is calling for the speedy delivery of billions of dollars in western weapons, while Russia has increased attacks and is preparing a larger offensive, although its progress has been halting so far.President Volodymyr Zelenskyy thanked Biden for coming at “the most difficult time” for his country. “This conversation brings us closer to victory,” Zelenskyy said at a joint appearance at Mariinsky Palace, his official residence.FT subscriber event: To mark the first anniversary of Russia’s full-blown invasion of Ukraine, the FT will be holding an exclusive webinar for subscribers to discuss the future of the war, with FT correspondents and special guests. Register for free.Five more stories in the news1. Fresh tremors hit earthquake-devastated province in Turkey Two tremors measuring 6.4 and 5.8 in magnitude struck the province of Hatay yesterday, two weeks after the region was devastated by larger earthquakes that killed almost 45,000 people.Related read: Turkey’s massive cost of rebuilding shattered towns and cities Tens of billions of dollars will be required to fund the reconstruction of quake-ravaged areas.

People caught in fresh tremors in Antakya in Turkey’s Hatay province © Clodagh Kilcoyne/Reuters

2. China’s top diplomat to discuss Ukraine war during Moscow visit Wang Yi, China’s most senior foreign policy official, will discuss the war in Ukraine with senior Russian officials this week and may meet Russian president Vladimir Putin, the Kremlin said yesterday. The announcement comes a day after the US warned that Beijing was “strongly considering” supporting Russia’s sputtering war effort with arms supplies.3. Hong Kong proposes letting retail investors trade cryptocurrencies Under plans launched yesterday by the Hong Kong Securities and Futures Commission, the industry’s two largest crypto tokens — bitcoin and ether — would be opened up to retail customers. Licensed exchanges would be required to ensure clients have “sufficient knowledge of virtual assets” before they are allowed to trade.4. World Bank members split on reforms Developing nations have warned against reforms at the World Bank that would imperil its triple-A credit rating and increase funding costs after Trump appointee David Malpass’s early departure. Shareholders and economists have argued the bank could provide more climate finance by expanding its balance sheet and taking on more risk.5. South Korea’s ruling party leader hints at need for nuclear weapons Chung Jin-suk, the leader of South Korea’s ruling People Power party, has warned that the country may have to “seriously consider” developing its own nuclear weapons as a deterrent to its northern neighbour. North Korea today fired two short-range ballistic missiles, following the launch on Saturday of what Pyongyang claimed was a Hwasong-15 intercontinental ballistic missile, which experts believe is capable of striking the mainland US.The day aheadPutin speaks on war Today, Russia’s president Vladimir Putin will address the war in Ukraine and its impact on Russian society in a delayed state-of-the-nation address, the Kremlin said.Economic data Gross domestic product is the main US data point today and minutes from the last Federal Reserve’s meeting land tomorrow.Related read: What is the level of dissent within the Federal Reserve? Evidence of widespread dissent could persuade the market that the Fed might be open to raising rates higher and for longer.Public sector finance UK public-sector borrowing figures for January are out today. Increases in debt interest and spending on energy support schemes made last month’s release the highest monthly total since records began in January 1993.Companies Last week NatWest announced an almost tripling of profits driven by higher interest rates. These should also boost profits for HSBC and Lloyds Banking Group when they report today and tomorrow.What else we’re reading America’s struggle to contain the deadly drug Fentanyl US parents are mourning the deaths of their children amid an unprecedented drugs crisis, which claimed 107,000 lives in the year to August 2022. About two-thirds of those deaths were caused by fentanyl, a synthetic opioid that is 50 times more potent than heroin and used to treat severe cancer pain. But it is increasingly being cut into illegal street drugs via a well-honed supply chain built by Chinese and Mexican crime syndicates.

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Britain can learn from Singapore on savings The UK invests too little. Naturally, this has led to a discussion of how to induce more investment. Yet how would the extra investment be funded by a country that is even more strikingly short of savings than it is of investment? Singapore’s model could be the answer, writes Martin Wolf.Missing Chinese dealmaker casts chill across tech sector The disappearance of Bao Fan, founder of investment bank China Renaissance, has set on edge the country’s vast tech industry that the dealmaker helped build. Bao’s fate is a pivotal test of Beijing’s stance on the sector — a two-year crackdown has already sidelined Alibaba chief Jack Ma, decimated the vast for-profit education industry and hit investments globally.China’s ChatGPT catch-up: Tech giants such as Baidu and Alibaba are racing to match the west’s recent developments in artificial intelligence.CEO whisperers: who does the boss turn to in their hour of need? Some leaders use trusted insiders, others rely on “professional critics” to tell them uncomfortable truths. Oliver Balch spoke to a range of chief executives to hear their stories. “CEOs often lack candid challenge . . . and instead end up in a little echo chamber, which is when companies are in danger of getting things horribly wrong,” said one CEO.Take a break from the newsAfter years spent as a “bottle brunette”, Grace Cook decided to reclaim her identity as a blonde and love her natural hair.

Reese Witherspoon as a lawyer whose courtroom skills are underestimated in the 2001 movie ‘Legally Blonde’ © Alamy More

London and Brussels could announce a deal to resolve a bitter dispute over post-Brexit trade in Northern Ireland as early as this week. But with final negotiations under way, one sticking point remains: the region’s biggest pro-UK party is demanding that it should not be subject to EU laws. The Democratic Unionist Party has paralysed Northern Ireland’s political institutions since May to press for changes to the so-called Northern Ireland Protocol, which sets the rules for post-Brexit trade. It is demanding that the region be allowed a say in the laws which govern it. When Brexit took effect in 2021, Northern Ireland was left inside the EU single market for goods and a trade border was put in the Irish Sea to avoid a politically sensitive land border with its EU neighbour, Ireland. But hardline unionists and the UK government say the protocol creates a “democratic deficit” that leaves Northern Ireland subject to EU rules.What is the ‘democratic deficit’?Under the protocol, the region has to follow EU rules for trade. The European Court of Justice, the bloc’s top court, has the final say in any disputes.However, this means that when regulations are changed, Belfast must follow suit. That could mean amending as many as 300 regulations that were still in force when the UK left the EU in 2020, and which still apply in Northern Ireland.Whether new regulations for goods trade in the single market apply in Northern Ireland can be discussed by an EU-UK joint committee that oversees the working of the Brexit trade agreement, chaired by the UK foreign secretary and the EU’s Brexit commissioner. If the UK objects but the EU believes they are necessary, Brussels could take unspecified “remedial measures” to force London to comply. DUP leader Sir Jeffrey Donaldson told UTV last month that if EU rules changed significantly from the current UK legislation it “would seriously impact our ability to trade within the United Kingdom because our standards would then diverge from UK standards”. A UK bill giving ministers powers to scrap large parts of the protocol, which is currently on ice in the House of Lords, would allow traders to follow UK or EU regulations in Northern Ireland — a route the DUP favours. EU diplomats say the legislation is a red line for Brussels and is akin to a loaded gun on the negotiating table. But hardline unionists say they object to the EU’s top court having the final say over application of the protocol.What are the obstacles to fixing it? The EU has ruled out any renegotiation of the protocol. Under Article 18 of the protocol, Northern Ireland’s legislators have the right to a vote late next year on whether or not to maintain some of the rules. Such a vote can potentially be held every four years, but will not allow politicians to scrap the protocol altogether.The region’s complicated power-sharing arrangements mean that agreement between the traditional nationalist and unionist communities — required for sensitive decisions — is difficult. Despite the DUP’s opposition, a majority of legislators backs the protocol as it stands.Jon Tonge, politics professor at the University of Liverpool, said that given the “dysfunctional nature” of the Stormont executive and the veto powers both sides hold, “it would be downright dangerous” to give too much say to legislators. Georg Riekeles, who helped negotiate the protocol for the EU and now works for the European Policy Centre think-tank, said Article 18 provided the region with sufficient democratic accountability. He warned that a “pick and choose” mechanism was unsustainable. “It would become the occasion of endless debates and ultimately the unravelling of the framework.” he said.Can the problems be overcome? One suggestion by the European Commission is for Northern Irish businesses and politicians to be given a consultative role. There is already an example of this for non-EU members Norway, Iceland and Liechtenstein, which are aligned with the single market and attend consultative groups with member states before legislation is drawn up. They can also veto the application of new laws in their countries but in practice this has never happened.“One could envisage a process that involves consulting the Northern Ireland assembly,” said Mujtaba Rahman, Europe managing director at consultancy Eurasia Group. “There is awareness of the specific situation with Northern Ireland and where things have a significant impact. Regulations coming down the track will be discussed and the joint committee will be a vehicle to do that.”Brussels points out that the implementation of the protocol can be adapted. Last year, for example, the commission unilaterally changed its regulations to prevent a shortage of medicines in Northern Ireland. “It shows that the protocol has the flexibility to work on the ground,” Maroš Šefčovič, the Brexit commissioner, said at the time.Others have suggested that the role of the ECJ as the ultimate arbiter of the protocol could be softened by Brussels committing to only taking legal action against alleged breaches of the trading arrangements in very limited circumstances.Michael Dougan, European Law professor at the University of Liverpool, said that could “mollify” London. “Easy to deliver, without amending protocol,” he tweeted. More

Rishi Sunak on Monday urged Eurosceptic Tory MPs to back him in his bid to end the bitter dispute with Brussels over post-Brexit trade rules for Northern Ireland, but opposition to a deal was hardening.The British prime minister still hopes to finalise an agreement this week, including providing a new role for the Northern Ireland assembly in scrutinising new EU rules that apply to the region.Sunak hopes that efforts to address what he says is a “democratic deficit” in the so-called Northern Ireland protocol could help to sell a deal to the region’s Democratic Unionist party and to his own MPs.On Monday Sunak met groups of Tory MPs to urge them to back a deal that he believes will restore the power-sharing executive in Northern Ireland and transform UK-EU relations.Diplomats in London and Brussels hope the deal can be sealed this week, marking a reconciliation of European powers ahead of the first anniversary of Russia’s invasion of Ukraine.But one senior Eurosceptic Tory MP said after meeting Sunak that “a lot more negotiation is needed” to come up with a deal that would satisfy Brexiters at Westminster and the DUP.“The idea that a deal could be done this week is grossly overstated,” the MP said. “It’s clear that we are still a considerable way from an agreement.”

Sunak’s allies still hold out hope of a deal on Wednesday, sealed by a meeting between the UK prime minister and European Commission President Ursula von der Leyen, but they admit that timetable could easily slip.On Monday Suella Braverman, home secretary, defended UK legislation that would unilaterally scrap the protocol, part of the Brexit treaty signed by Boris Johnson in 2019.She argued that proceeding with the Northern Ireland protocol bill would keep up pressure on Brussels to strike a deal, adding that it was “one of the biggest tools that we have” in solving the dispute.Her comments echoed those of Johnson, who also wants to proceed with the legislation — currently on hold in the House of Lords. EU officials have described the bill as “a loaded gun on the table”.Meanwhile, Sammy Wilson, the DUP’s chief whip at Westminster, told the BBC that there should be “no role for EU law in Northern Ireland”, and therefore no role for the judges of the European Court of Justice.Downing Street said Sunak would drop the Northern Ireland protocol bill if a deal was reached with Brussels that met all of its objectives.On Monday James Cleverly, foreign secretary, and Chris Heaton-Harris, Northern Ireland secretary, held further talks on the deal with Maroš Šefčovič, the European Commission vice-president.“We are focused on finding a durable solution for NI,” Cleverly wrote on Twitter. Šefčovič said in a tweet: “Our priority is to succeed for the benefit of all communities. Hard work continues. We’ve agreed to meet later this week.”Sunak’s allies believe the deal taking shape will meet the seven tests for reforming the protocol set out by the DUP and hope that Sir Jeffrey Donaldson, its leader, can sell it to his party.One Eurosceptic Tory MP said that DUP acceptance of the deal was paramount. “We as a party mustn’t set a higher bar than the unionists,” he said. “If the DUP is prepared to compromise that’s good enough. There is always a risk of zealots in the Tory party that want to go further than unionists.”Micheál Martin, Ireland’s foreign minister, said: “I think what’s very important is that everybody now from here on think about the people of Northern Ireland.”Sir David Lidington, former de facto UK deputy prime minister, told the BBC that Sunak should push through a deal even in the face of opposition from some in his own party.“He should be bold, if he thinks the deal is in the national interest then he should make his case accordingly,” he said. More