· Dollar holds gains as U.S. coronavirus surge dulls risk appetite
The dollar was hemmed in a narrow range on Friday, supported by safe-haven flows as a resurgence of the coronavirus in the United States discouraged some investors from taking on excessive risk.
The U.S. economy added more jobs than expected in June, data showed on Thursday, but reaction in the currency market has been muted because another spike in coronavirus infections threatens to once again put the brakes on economic activity
The yuan held steady as investors avoided big positions due to worries about diplomatic friction between Washington and Beijing over civil liberties in Hong Kong.
· The U.S. can ‘change the world’ by devaluing the dollar, analyst claims
Independent macro advisor Hugh Hendry said quantitative easing programs — where central banks buy assets like government bonds to inject liquidity into the economy — were not working.
“Quantitative easing — we’re being missold something,” Hendry argued. “Simply publishing or expanding these inert central bank reserves and trying to scare us all to death that they’re actually printing real money is a fraud.”
The underlying problem, he claimed, is that there is a shortage of dollars in the global market.
Instead of targeting bonds as a form of economic stimulus, policymakers should look to the value of the greenback, he suggested.
Hendry has suggested that the dollar is “the new gold standard,” ‘We’re going to target 70 or 60 on the dollar index.
· U.S. reports 55,000 COVID-19 cases in single day, hits new global record
The United States reported more than 55,000 new COVID-19 cases on Thursday, a new daily global record for the coronavirus pandemic, as infections rose in a majority of states.
A surge in coronavirus cases over the past week has put President Donald Trump’s handling of the crisis under the microscope and led several governors to halt plans to reopen their states after strict lockdowns.
The daily U.S. tally stood at 55,274 late Thursday, topping the previous single-day record of 54,771 set by Brazil on June 19.
Coronavirus cases are rising in 37 out of 50 U.S. states including Florida, which confirmed more than 10,000 new cases on Thursday. That marked the state’s largest daily spike so far and a level that exceeded single-day tallies from any European country at the height of the outbreak there.
California, another epicenter, saw positive tests climb 37% with hospitalizations up 56% over the past two weeks.
· China warns US of countermeasures over Hong Kong sanctions bill
China has promised to take "all necessary countermeasures" if the United States pressed ahead with legislation penalising banks doing business with Chinese officials who implement Beijing's draconian new national security law on Hong Kong.
· Taiwan has opened an office to help handle the applications of people from Hong Kong who want to resettle in the island
Taiwan slams Hong Kong national security law, opens office to help city’s residents. Taiwan has opened an office to help handle the applications of people from Hong Kong who want to resettle in the island.
The Taiwan-Hong Kong office opened in Taipei on Wednesday, one day after China’s national security law for Hong Kong was implemented.
The office will provide special consultation and assistance services for Hong Kong people in the areas of study, employment, investment, entrepreneurship, immigration, and residency, said Taiwan’s Mainland Affairs Council.
Taiwan may be next. “If the Chinese government can take away Hong Kong, and to bring down Hong Kong’s freedom and human rights, I think Taiwan is going to be the next,” said Wu, Taiwan’s minister of foreign affairs, said in Lowy Institute’s podcast.
However, The relationship between China and Taiwan is complex. The Taiwanese are even more wary of Beijing after last year’s protests in Hong Kong calling for greater democracy.
· Historic Plunge for Singapore Retail Sales Shows Lockdown Pain
Singapore’s retail sales plunged in May by the most since records began in 1986, signaling the economic hit from lockdown restrictions could be worse than earlier anticipated.
Overall sales plummeted by 52.1% in May from a year earlier, Singapore’s Department of Statistics said in a report Friday, worse than the 47% median in a Bloomberg survey of economists.
· Mortgage demand falls for the second straight week, signaling a potential slowdown in the housing recovery
Mortgage applications to purchase a home fell for the second straight week, down 1% from the previous week, according to the Mortgage Bankers Association
Refinance demand, the most sensitive to interest rates, fell 2% for the week but was 74% higher than a year ago.
· Japan's May household spending, machinery orders seen falling as virus hits: poll
Japan’s household spending and machinery orders likely extended declines in May, providing further evidence that the coronavirus crisis is hurting the economy.
Analysts predict the economy is on course for a significant contraction in the second quarter as the coronavirus outbreak hits global demand for goods and keeps businesses closed.
Household spending is expected to have fallen 12.2% in May from a year earlier, which would be the fastest pace of decline since comparable data became available in 2001, the poll of 16 economists showed. It would also follow an 11.1% drop in April.
· Malaysia's central bank seen cutting key rate again as pandemic persists: Reuters poll
Malaysia’s central bank is expected to cut interest rates to a historic low next week, according to a slim majority in a Reuters poll, as it seeks to protect Southeast Asia’s third largest economy from the fallout of the coronavirus pandemic.
Bank Negara Malaysia (BNM) will cut its overnight policy rate MYINTR=ECI by at least 25 basis points (bps) to 1.75%, according to seven out of the 12 economists polled, with two of them betting on a bigger 50 bps rate reduction.
The remaining five economists expected interest rates to stay at 2.00%, already a record low, after three consecutive rate reductions in as many meetings this year.
· Oil slides as fears grow that coronavirus resurgence could stunt fuel demand recovery
Oil prices fell on Friday, reversing earlier gains, as the resurgence of the coronavirus globally and in the United States, the world’s largest oil consumer, stoked worries that a fuel demand recovery could stall.
Brent crude LCOc1 futures were down 35 cents, or 0.8%, at $42.79 a barrel as of 0633 GMT, and U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 35 cents, or 0.9%, to $40.30 a barrel.
Both benchmarks rose more than 2% on Thursday, buoyed by stronger-than-expected U.S. jobs data and a fall in U.S. crude inventories. For the week, Brent is up 4.3% and WTI is up 4.7%.
Increases in the daily cases of the coronavirus, however, globally and in the United States pressured prices. New U.S. COVID-19 cases rose by more than 50,000 on Thursday, setting a record for a third consecutive day, according to a Reuters tally.
Reference: CNBC, Reuters , Daily FX
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