· Dollar wallows as data temper recovery doubts
The dollar nursed losses on Tuesday and riskier currencies added a fraction to galloping gains, after better-than-expected U.S. services data provided the latest boost to confidence in a worldwide economic recovery from the COVID-19 pandemic.
Against a basket of currencies, the dollar huddled near a two-week low. The Chinese yuan picked up where it left off after soaring with runaway Chinese equities on Monday and briefly broke past the 7 per dollar barrier. The Antipodean currencies tagged along for the ride.
The surge came after a front-page editorial in the China Securities Journal, affiliated with state-run Xinhua, said fundamentals laid the foundation for a “healthy bull market”.
The kiwi rose as much as 0.3% to a one-month high of $0.6580, testing resistance around $0.6585. Speizer expects it could reach $0.67 if sentiment holds. The Australian dollar was steady at $0.6976.
· EU cuts economic forecasts for the region, now projecting a 8.3% slump this year
The European Commission has slashed its 2020 and 2021 economic expectations as the coronavirus pandemic keeps taking a toll on the 27 economies.
The Brussels-based institution expects the 27-member region to contract by 8.3% this year, followed by a rebound of 5.8% in 2021. In May, the Commission estimated a 7.4% contraction for total GDP across the region this year, with a rebound of 6.1% in 2021.
The outlook has worsened over the last two months irrespective of the steps that most European countries have taken to reopen their economies.
In recent days, concerns have also emerged about regional outbreaks. The Spanish authorities have re-imposed restrictions in the region of Galicia, and Portugal reinstated some measures in Lisbon after a growing number of infections.
The International Monetary Fund said in June that the euro area, the 19-member region that shares the euro, would contract by more than 10% in 2020. France, Italy and Spain could contract by about 12% this year, according to the IMF.
· Coronavirus live updates: Australia closes interstate border; California asks indoor businesses to close
-Chaos as Australia closes border between two most populous states
Australian officials rushed to put in place a travel permit system ahead of a border closure between its two most populous states of New South Wales and Victoria, according to Reuters.
The border — which has 55 roads that are used daily by commuters, students and road freight — will be closed for the first time in 100 years. It comes amid a spike in coronavirus cases in Melbourne, the report said.
Officials were scrambling to issue daily permits for residents on both sides of the border to cross, but said delays were likely, according to Reuters. The closure will probably hit businesses hard, causing logistical problems, the report said.
-Newsom asks more counties to close indoor businesses as cases grow
California Gov. Gavin Newsom asked six additional counties to close their indoor businesses, including restaurants, movie theaters and museums, among others, as coronavirus hospitalizations and cases continue to grow across the state.
There are now 23 counties on the state’s “watchlist,” including some of California’s most populated areas like Los Angeles, Orange and San Bernadino counties. San Diego county was one of the six counties added to the list Monday.
“More broadly, activities that are indoors we want to move them outdoors, and we’ve done that in multiple sectors in our economy,” Newsom said at a press briefing.
The percent of total tests returning positive has grown from 4.9% to 6.8% over the last two weeks, Newsom said. There were 5,790 people hospitalized with Covid-19 as of Sunday, an increase of 50% in two weeks.
-Shoppers are retreating again with Covid-19 cases on the rise in certain states
Retail was beginning to bounce back from its lows. But consumers are once again retreating from bricks-and-mortar stores, according to new data from ShopperTrak. Traffic at retail stores in the U.S. was down the most, on a year-over-year basis, during the week ended April 18, according to data from the retail consultancy ShopperTrak, falling 82.6%. Up until two weeks ago, there were slight improvements those and declines were lightening. But over the last 14 days, with coronavirus hot spots emerging in states including Florida and Texas, traffic declines have accelerated once again, ShopperTrak found. “It’s all about consumers feeling confident,” ShopperTrak senior director Brian Field said in a phone interview.
-Gig workers nab bigger share of unemployment benefits
Certain workers, like the self-employed and gig workers, are getting an increasing share of unemployment benefits.
Nearly 13 million Americans were receiving jobless aid through the Pandemic Unemployment Assistance program as of mid-June, according to most recent Labor Department data.
That represents about 41% of overall unemployment recipients nationwide — up from a little over a third of the total a month earlier.
The PUA program, created by a federal coronavirus relief law in March, expanded benefits to these workers, who are ineligible for unemployment aid in normal times.
· As China tightens its grip on Hong Kong, it’s also paving the way for money to flow into the city
China is paving the way for more money to flow into Hong Kong and shoring up its status as a financial hub.
Investors and foreign companies have been wary that Hong Kong’s status as a financial hub might be eroded, as China last week went ahead to implement a controversial national security law in the city despite criticism. That has caused friction with Washington, which has said it will revoke Hong Kong’s special trading status with the U.S.
Against that backdrop, China’s central bank last week launched an initiative — the Wealth Management Connect — that analysts said will bring more inflows into Hong Kong, and attract foreign financial institutions to expand their business in the city.
Authorities have also stepped up to reassure investors that Hong Kong’s financial hub status will remain intact.
· U.S. is ‘looking at’ banning TikTok and Chinese social media apps, Pompeo says
The U.S. is “looking at” banning TikTok and other Chinese social media apps, Secretary of State Mike Pompeo told Fox News on Monday.
His comments come amid rising tensions between the U.S. and China and as scrutiny on TikTok and Chinese technology firms continue to grow.
· German industrial output rebounds in sign of post-lockdown recovery
Germany’s industrial production rebounded in May, rising by 7.8% on the month after falling by a revised 17.5% in April, the Statistics Office said on Tuesday, in the latest sign that Europe’s largest economy is recovering after lockdown.
Despite the recovery, production is still well below the levels recorded before the onset of the coronavirus crisis. May output was down 19% in calendar- and season-adjusted terms on February, the month before lockdown measures were imposed.
· Oil prices slide as spike in U.S. coronavirus cases casts gloom over fuel demand prospects
Oil prices fell on Tuesday amid concerns that a surge in new coronavirus cases, especially in the United States, will hamper any recovery in fuel demand.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 54 cents, or 1.3%, to $40.09 a barrel at 0703 GMT, well off an earlier high of $40.79.
Brent crude LCOc1 futures declined by 56 cents, or 1.3%, to $42.54, after hitting an intraday high of $43.19.
With 16 U.S. states reporting record increases in new COVID-19 case in the first five days of July, according to a Reuters tally, there is mounting concern that public health measures to limit the virus spread will curb fuel demand in the world’s biggest oil consuming country.
Reference: CNBC, Reuters
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