· Safe-haven yen, Swiss franc shine as U.S. stock market falters
The safe-haven yen and Swiss franc on Tuesday gained for a second straight day this week as U.S. stocks stumbled a day after a blistering rally that propelled the tech-heavy Nasdaq to an all-time high.
The yen rose to one-week highs against the dollar, while the Swiss franc climbed to its highest in more than two months versus the greenback.
Except for the Nasdaq, U.S. stocks were mostly lower, as investors cautiously looked ahead to the Fed statement on monetary policy on Wednesday.
In afternoon trading, the dollar fell 0.6% against the yen to 107.75 yen, after earlier touching a one-week low of 107.63 yen.
Against the Swiss franc, the dollar dropped 0.8% to 0.9503 franc, after earlier plunging to 0.9483, the lowest since mid-March.
The euro recovered early losses to trade up 0.4% at $1.1339 .
The U.S. dollar index fell 0.3% to 96.334 .
Investors are looking ahead to Wednesday’s Fed announcement following a two-day meeting. Speculation is growing that the U.S. central bank might adopt yield targets on bonds, or some other measures to anchor long-term yields.
· Sterling rises above $1.27; driven by dollar moves
The pound was driven by dollar moves on Tuesday, rising back above $1.27 but down half a percent against the euro, as shifts in global risk appetite played a bigger role for sterling than domestic issues such as Brexit.
The pound has risen 3.1% against the dollar this month, clearing $1.27 for the first time since March, as several countries emerge from coronavirus lockdowns, weakening demand for the safe-haven U.S. currency.
Investors are still waiting for more information about the proposed re-opening of the UK economy.
· CME to reopen Chicago eurodollar options trading pit on August 10
CME Group Inc (CME.O) said on Tuesday it will reopen its eurodollar options trading pit on Aug. 10, making it the latest U.S. exchange operator to resume open outcry trading, which had been put on hold due to the coronavirus pandemic.
CME said all its other trading pits, which were shuttered after the market closed on March 13, would remain closed until Chicago, where they are based, reached Phase 5 of its reopening plans.
· What to look for in the Fed's U.S. economic outlook
U.S. Federal Reserve policymakers on Wednesday will publish their first economic projections since the coronavirus pandemic set off a recession in February, estimates expected to signal a collapse in output this year and near-zero interest rates for the next few years.
The economic projections being released on Wednesday will also offer insight into whether Fed officials see the pandemic as inflicting permanent damage on the economy. Nomura economist Lewis Alexander projects little change to the Fed’s earlier estimate that the economy can sustain about 1.9% yearly growth in the long run, along with 4.1% unemployment, though both could erode. More broadly, he said, “it is important to emphasize the significant amount of uncertainty” around the forecasts.
· U.S. Fed to publish annual bank 'stress test' results on June 25
The U.S. Federal Reserve said on Tuesday it will publish the results of its annual bank health exams, known as “stress tests,” on June 25 at 4:30 p.m. EDT.
The results this year will include an added test to take into account economic stress cause by the widespread coronavirus lockdowns, the Fed has said.
· There’s a conspiracy theory about the unemployment numbers. Labor experts call it baseless
A conspiracy theory has emerged relative to the unemployment rate, suggesting that the Trump administration rigged official statistics to give the illusion of a rebounding economy.
But labor experts and economists have vigorously denounced such suggestions, which they call baseless and invalid.
“No economist worth his salt thinks the numbers have been fudged,” said Michael Farren, a research fellow at George Mason University.
The agency reported a drop in the U.S. unemployment rate on Friday, to 13.3%.
The turnaround from April’s 14.7% figure was a shocker — economists had predicted the rate to be closer to 20%, as millions of people continue to file for unemployment benefits each week as a result of the coronavirus pandemic
“The trump folks fudged the figures and the real unemployment number was 17-19% unemployment not 13%,” Howard Dean, a Democrat and the former governor of Vermont who ran for president in 2004, tweeted.
“You should always assume Trump lies,” he added.
The BLS said in its report that the true unemployment rate was likely greater than 16% due to a data mis-classification error.
· Trump was talked out of firing Defense Secretary Esper over disagreement on protest response, WSJ says
President Donald Trump nearly fired Defense Secretary Mark Esper following a disagreement over methods to quell nationwide protests, but was talked out of it, The Wall Street Journal reported Tuesday, citing officials.
Trump consulted with several advisors about his intention to fire Esper, his fourth defense secretary, according to the report. The president decided not to immediately fire Esper after talking with confidants, including White House chief of staff Mark Meadows, Secretary of State Mike Pompeo and Sens. Tom Cotton, R-Ark., and James Inhofe, R., Okla.
· Oil jumps 2% on supply cut optimism
Oil prices rose on Tuesday, as traders said concerns about a resurgence in coronavirus cases were offset by recent commitments from major oil producers to curb production.
Brent crude gained 27 cents, or 0.66%, to trade at $41.11 per barrel. West Texas Intermediate crude gained 75 cents, or 1.96%, to settle at $38.94 per barrel.
Fuel demand has recovered from April’s collapse brought on by lockdowns to control the pandemic. Analysts have said, however, that the oil market’s rapid surge to more than $40 a barrel may be banking an overly optimistic view of consumption.
Reference: CNBC, Reuters
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