· Dollar falls as optimism about economic recovery boosts risk sentiment
The dollar fell on Monday as risk sentiment improved on optimism that the worst of the economic downturn caused by the global spread of the coronavirus may be in the past.
U.S. manufacturing activity eased off an 11-year low in May, the strongest sign yet that the worst of the economic downturn was behind as businesses reopen, though the recovery from the COVID-19 crisis could take years because of high unemployment.
It comes after China’s Caixin/Markit Purchasing Managers Index (PMI) showed a marginal but unexpected improvement in factory activity last month.
In the euro zone, the manufacturing PMI recovered somewhat in May from April’s record low, although factory activity still contracted heavily. Japan and South Korea, however, saw the sharpest falls in activity in more than a decade.
The dollar index against a basket of currencies fell 0.40% to 98.829, the lowest since March 16.
The single currency gained 0.31% against the greenback to $1.1132, after earlier reaching $1.1153, the highest since March 17.
The Australian dollar rose 1.97% to $0.6797, the highest since January 17.
Tensions between the United States and China remain a headwind for risk appetite.
The greenback pared losses earlier on Monday after it was reported that China has told state-owned firms to halt purchases of soybeans and pork from the United States, raising concerns that the trade deal between the United States and China could be in jeopardy.
China is ready to halt imports of more agriculture products from the United States if Washington takes more action on Hong Kong, sources told Reuters.
· Trump threatens to deploy military as George Floyd protests continue to shake the U.S.
As the nation prepared for another night of violent protests sparked by the police killing of George Floyd, President Donald Trump threatened to deploy the military if states and cities failed to quell the demonstrations.
“I am mobilizing all federal and local resources, civilian and military, to protect the rights of law abiding Americans,” Trump said during a hastily arranged address at the White House.
“Today I have strongly recommended to every governor to deploy the National Guard in sufficient numbers that we dominate the streets. Mayors and governors must establish an overwhelming presence until the violence is quelled,” Trump said.
“If a city or state refuses to take the actions necessary to defend the life and property of their residents, then I will deploy the United States military and quickly solve the problem for them.”
President Trump on Monday lashed out at governors for their response to the violence roiling the country, calling protesters “terrorists,” demanding “retribution” and warning the governors they would look like “jerks” if they did not send them to “jail for long periods of time.”
· States accelerate reopening plans; UK could be at risk for second wave
People across the U.S. gathered in mass protests against police brutality after the killing of George Floyd in Minneapolis, raising concerns of further virus spread through the demonstrations. More than 1.7 million people in the U.S. have tested positive for the virus and over 104,000 have died due to Covid-19. Black Americans have made up a disproportionate share of the deaths as underlying conditions, income inequality and disparity in access to health care have exacerbated the outbreak in the community.
Some state and city officials have urged protesters to seek Covid-19 testing and to limit movements in the weeks following the demonstrations in an effort to prevent infections.
Ø U.S. cases: More than 1.86 million (+21,716)
Ø U.S. deaths: At least 106,921 (+726)
· Officials warn protests could help virus spread
As protests erupt across the U.S., officials are sounding the alarm that such mass gatherings could allow the coronavirus spread throughout the population.
“I think there’s going to be a lot of challenges coming out of the events of the past week,” former Food and Drug Administration Commissioner Dr. Scott Gottlieb said in an interview on “Squawk Box” on Monday. “One of them’s going to be that probably chains of transmission will have gotten lit by large gatherings. I don’t think there’s really a question about that.”
States have eased restrictions meant to curb the spread of the virus in recent weeks, particularly as some studies indicate the virus doesn’t spread as easily outdoors. However, the protests present a significantly larger risk to increasing spread of the virus, Gottlieb said.
“This isn’t a day at the beach or going out to a picnic where you’re outside and you might be in larger groups but there’s some social distancing and you’re able to take some precautions,” he said. “In these kinds of gatherings, in these kinds of crowds, many of which lost control of the crowds, you’re not going to be able to take those kinds of precautions.”
· Congressional Budget Office says coronavirus will cost the economy nearly $8 trillion
The Congressional Budget Office estimated the coronavirus outbreak likely will sap about $7.9 trillion of economic activity over the next decade-plus, even with all of the rescue funding being poured in to offset the pandemic’s impact.
Through fiscal 2030, the virus will reduce real economic output — nominal GDP adjusted for inflation — by 3% from initial economic estimates in January before the pandemic hit, the CBO said.
“Business closures and social distancing measures are expected to curtail consumer spending, while the recent drop in energy prices is projected to severely reduce U.S. investment in the energy sector,” CBO Director Phillip L. Swagel said in a written response to an inquiry from Sen. Chuck Schumer (D-New York). “Recent legislation will, in CBO’s assessment, partially mitigate the deterioration in economic conditions.”
Nominal GDP is expected to be $15.7 trillion, or 5.3%, less than originally forecast due to the coronavirus, CNBC’s Jeff Cox reported.
· Fauci concerned about new cases as states work to reopen
Photos of crowded bars and packed beaches have made Dr. Anthony Fauci, the director of the National Institute for Allergy and Infectious Diseases, concerned about a potential resurgence in coronavirus cases.
“If people want to get out, they’ve really got to gauge it with the level of the outbreak in their particular area,” Fauci said in an interview with STAT.
Fauci also spoke about vaccine development and said initial data from the first phase of the Moderna vaccine trial “looked very promising from the neutralizing antibody standpoint.” However, he said Moderna should have waited until it had all the data from the first phase before discussing it with the public.
· U.K. could be at risk of second wave after reopening too quickly, scientist says
A top scientist has warned that the U.K. is moving too quickly in lifting coronavirus restrictions. David King, who previously served as the U.K. government’s chief scientific advisor, said policymakers were putting the country at risk of suffering a second wave of the virus, CNBC’s Chloe Taylor reports.
Additional limitations were lifted and people in England can now meet outside in groups of six while social distancing and primary schools can reopen.
· Gilead says remdesivir helped patients suffering from ‘moderate’ form of Covid-19
Gilead Sciences released data from a phase 3 trial indicating that its antiviral drug remdesivir helped patients suffering from a “moderate” case of the coronavirus.
Those who were on a five-day course of the treatment were 65% more likely to see clinical improvement at day 11 in comparison to standard of care, CNBC’s Berkeley Lovelace Jr. reports.
· Brazil to end 2020 with debt at 94% of GDP, treasury secretary says
Brazil will end 2020 with debt equal to 94% of the nation’s gross domestic product, Treasury Secretary Mansueto Almeida said on Monday, adding that Brazil needs to show it is committed to additional fiscal reforms for the figure to fall.
The government last month revised its official 2020 debt forecast, which is now 93.5% of GDP. But that is based on its assumption that GDP contracts by 4.7%, which is already looking optimistic. The median estimate in a Reuters poll of economists points to a record 6.3% contraction.
Brazil registers 14,169 additional cases of coronavirus to 529,018 and 732 new deaths to 30,046 on Monday
· South Korea to stabilise financial markets if U.S.-China tension spurs volatility
South Korea will take action to stabilise financial markets if U.S.-China tensions over Hong Kong spark more volatility, the vice finance minister said on Tuesday.
· Oil moves lower as U.S.-China tensions weigh
Oil futures steadied on Monday as rising U.S.-China tensions weighed on sentiment, but prices drew support from reports that OPEC and Russia were close to a deal extending output cuts.
U.S. crude fell 5 cents, or 0.14%, to settle at $35.44 per barrel. Brent futures rose 48 cents, or 1.3%, to settle at $38.32 per barrel.
Investors turned cautious after China warned of retaliation on U.S. moves over Hong Kong.
China has asked its state-owned firms to halt purchases of soybeans and pork from the United States, two people familiar with the matter said, after Washington said it would eliminate special U.S. treatment for Hong Kong to punish Beijing.
Reference: CNBC, Reuters, Worldometers, New York Times
Thai
Eng