· Dollar steadies near multi-week lows, yuan shines again
The dollar nursed losses against most currencies on Thursday as a rally in riskier assets such as global equities and commodities put a dent in safe-haven demand for the U.S. currency.
China’s yuan rose to a four-month high against the greenback, extending recent gains as investors of all stripes increase positions in Chinese stocks due to growing optimism about the world’s second-largest economy.
Lingering worries about the spread of the coronavirus and a light calendar in Asia could keep some currency pairs in a tight range, but the dollar’s losses are gradually increasing as sentiment favours riskier bets on long-term economic growth.
Against the euro, the dollar was quoted at $1.1339, close to a three-week low.
The euro could get a boost later in the day as Germany is scheduled to release export data. Economists expect shipments from the euro zone’s largest economy to rebound sharply in May from a large decline in the previous month.
The greenback was also close to a three-week low against the pound, last trading at $1.2613.
The dollar was little changed at 107.33 yen.
Asian stocks rose on Thursday, following gains in the tech-heavy Nasdaq to a record closing high on Wednesday.
The onshore yuan rose to 6.9875 per dollar, breaking past the closely watched level of 7 to reach the highest since March 17.
· USD/JPY holds above the 107.20 support amid cautious market
USD/JPY is off the lows but the bounce remains tepid amid mixed market sentiment and a broadly subdued US dollar. Growing coronavirus risks combined with escalating Australia-China row over the Hong Kong issue dents the appetite for risk.
The short-term technical picture for USD/JPY ranges from neutral to slightly bearish as per indicators in the 4-hour chart. From a broader perspective, USD/JPY continues to trade in a rather narrow channel bounded by the 20-day SMA on the downside, currently at 107.20, and the 100-day SMA on the upside, now at 107.75. A break of either one of these levels could trigger a more substantial movement in that direction. On the downside, the next target would be at 106.80, Jun 26 low. On the upside, the next barrier stands at 108.35, where the 200-day SMA lies.
Support levels: 107.20 106.80 106.60
Resistance levels: 107.95 108.35 108.65
· Tokyo coronavirus cases hit record daily high of 224, NHK says
Tokyo has recorded 224 new cases of coronavirus infection on Thursday, public broadcaster NHK said, marking a new daily record in Japan’s capital since the crisis began.
The total confirmed cases surpassed the previous record of 206 recorded on April 17 when Tokyo and other major population centres were under a state of emergency.
· Russia reports more than 6,500 new coronavirus cases
Russia on Thursday reported 6,509 new cases of the novel coronavirus, pushing its official nationwide tally to 707,301, the fourth largest caseload in the world.
The national coronavirus taskforce said 176 people had died in the last 24 hours, bringing the official virus death toll to 10,843.
· Pompeo takes aim at Chinese tech firms over data theft concerns
Secretary of State Mike Pompeo said Wednesday that the Trump administration would seek to block the Chinese government’s efforts aimed at stealing American citizens’ private information through telecommunications and social media.
“The infrastructure of this next 100 years must be a communications infrastructure that is based on a Western ideal of private property and protection of private citizens information in a transparent way,” the nation’s top diplomat said at the State Department. He accused Chinese hardware and software companies of not following this model.
Pompeo’s remarks come two days after he said the U.S. was looking at banning TikTok as well as other Chinese social media apps citing national security concerns. He explained in a Monday interview with Fox News that the Trump administration will examine the infrastructure of Chinese social media apps as it did with Chinese telecommunication giants Huawei and ZTE.
· German exports rebound less than expected in May
German exports rebounded less than expected in May as demand remained subdued despite the lifting of lockdown measures introduced to contain the spread of the coronavirus, data published on Thursday showed.
Seasonally adjusted exports surged by 9% on the month after diving by 24% in April, remaining almost 27% lower than their pre-crisis level in February, the Federal Statistics office said.
Imports rose by 3.5% after a slump of 16.6% the previous month, suggesting that consumption in Europe’s largest economy remained weak. The trade surplus increased to 7.6 billion euros.
Economists polled by Reuters had expected exports and imports to rise by 13.8% and 12% respectively. The trade surplus was predicted to come in at 5.2 billion euros.
The Statistics Office said exports to China were 12.3% lower than in May last year, while exports to the United States were down 36.5% year-on-year in May.
· UK's Sunak: too early to predict shape of recovery from recession
Britain is facing a significant recession but it is too early to tell how quickly the economy will be able to recover, British finance minister Rishi Sunak said on Thursday.
Asked about the outlook for the economy, Sunak said: “It’s too early to tell... we won’t know the exact shape of (the) recovery for a little while.”
“I am absolutely anxious about the state of the economy. We are... entering into a very significant recession, we know that that is happening,” he told Sky News.
· UK's Sunak: we must watch interest rates and debt costs
British finance minister Rishi Sunak said on Thursday it was important to be alert to possible changes in interest rates, adding it was likely the cost of servicing debt would be included in the government’s future budget rules.
“We are able to borrow now at record low rates, that enables us to carry a higher degree of debt,” Sunak told BBC radio.
“But it will be important that we remain alert to changes in those interest rates, which is why, if we think about our future fiscal framework, it is likely and probably sensible that we have some notion of the interest cost as part of that.”
· The U.K. property market was showing signs of returning to life last month even before the government announced an enormous tax break for most home buyers.
The government has temporarily increased the stamp duty threshold to £500,000 for property sales in England and Northern Ireland, until 31 March 2021,
Almost nine out of 10 buyers paying nothing to the government
This will save buyers as much as £15,000, if they are buying a property of £500,000 or more.
· BOJ offers bleakest view on Japan's regions in over a decade
The Bank of Japan cut its economic view for all of the country’s nine regions for the second straight quarter, the first such downgrade since Lehman Brothers collapsed in 2008, backing signs the economy could fall deeper into recession.
In its quarterly report released on Thursday, the BOJ offered a bleaker view for most regions than three months ago due to recent data pointing to slumping factory output, consumption and capital expenditure.
The warning comes ahead of the central bank’s interest rate decision next week.
· Oil steady as coronavirus lockdown fears offset gasoline recovery signs
Oil prices were little changed on Thursday as concerns about renewed COVID-19 lockdowns in the United States outweighed signs of a recovery in U.S. gasoline demand.
U.S. West Texas Intermediate (WTI) crude futures dipped 3 cents, or 0.07%, to $40.87 a barrel by 0443 GMT, after rising 0.7% on Wednesday.
Brent crude futures edged up 2 cents, or 0.05%, to $43.31, after gaining 0.5% on Wednesday.
Oil prices rose on Wednesday as data from the U.S. Energy Information Administration showed U.S. gasoline stockpiles fell by 4.8 million barrels last week, much more than analysts had expected, as demand climbed to 8.8 million barrels per day (bpd), highest since March 20.
A spike in COVID-19 cases across several U.S. states, however, raised the prospect of renewed lockdowns that would likely hold back any sustained recovery in fuel demand.
That has kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.
Reference: CNBC, Reuters, Bloomberg
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