· Dollar climbs from four-week low as US stocks decline
The dollar rallied from a four-week low on Thursday, as weaker U.S. stocks enhanced the currency’s safe-haven appeal for investors following a surge in new coronavirus cases and a U.S. Supreme Court ruling on President Donald Trump’s financial records.
The euro fell from a one-month high versus the dollar, while commodity currencies, which tend to rise when risk appetite increases, also slid against the greenback.
Earlier in the global session, the dollar struggled, with the Chinese yuan climbing to a four-month peak, as investors increased positions in Chinese stocks on growing signs of a recovery in the world’s second-largest economy.
Market sentiment turned, however, during the U.S. session. Another contributing factor, apart from the Supreme Court decision, was the renewed surge in COVID cases. More than 60,000 new COVID-19 infections were reported on Wednesday and U.S. deaths rose by more than 900 for the second straight day, the most since early June.
U.S. stocks fell on Thursday, a day after hitting a record closing high. The dollar continues to move in opposition to stocks and risk appetite.
Analysts believed though that despite losses, stocks should remain well-supported on dips.
In early afternoon trading, the dollar index rose 0.3% to 96.741, after falling to a four-week low of 96.233.
The euro dropped 0.3% to $1.1291, not that far from a one-month high around $1.1371 hit earlier in the day even after German export data failed to meet analysts’ expectations.
The Chinese yuan soared to a four-month high of 6.9808 in the offshore market and was last little changed against the dollar at 6.9950.
The dollar was flat against the yen at 107.25 yen and was up 0.3% versus the Swiss franc at 0.9402 franc.
· Coronavirus records in Florida, Texas and California erode hopes of economic revival
Record-breaking rises in coronavirus cases and deaths in several U.S. states are dimming hopes of a quick economic recovery as data shows shoppers staying out of stores in areas where cases are rising the most.
In Arizona, Texas, Florida, Georgia and South Carolina, which were among the first states to reopen commerce in May, retail foot traffic now lags elsewhere based on cell phone tracking, data firm Unacast said.
More than 60,000 new COVID-19 infections were reported across the United States on Wednesday, the greatest single-day tally by any country since the virus emerged late last year in China. U.S. deaths rose by more than 900 for the second straight day.
· Airborne transmission of coronavirus in restaurants, gyms and other closed spaces can’t be ruled out, WHO says
The World Health Organization published new guidance Thursday, saying it can’t rule out the possibility that the coronavirus can be transmitted through air particles in closed spaces indoors, including in gyms and restaurants.
he WHO previously acknowledged that the virus may become airborne in certain environments, such as during “medical procedures that generate aerosols.” The new guidance recognizes some research that suggests the virus may be able to spread through particles in the air in “indoor crowded spaces.” It cited “choir practice, in restaurants or in fitness classes” as possible areas of airborne transmission.
“In these events, short-range aerosol transmission, particularly in specific indoor locations, such as crowded and inadequately ventilated spaces over a prolonged period of time with infected persons cannot be ruled out,” the United Nations health agency’s new guidance said.
· Brazil's Bolsonaro in good health after positive coronavirus test, press office says
Brazilian President Jair Bolsonaro is in good health after testing positive for the novel coronavirus earlier this week, his press office said on Thursday.
“President Jair Bolsonaro, diagnosed with COVID-19 on (July) 7, is getting on well, without complications,” the statement said. “He is in good health and continues to be monitored routinely by the medical team of the Presidency of the Republic.”
· Fed balance sheet below $7 trillion, repo drops to zero for first time since September
The U.S. Federal Reserve’s holdings of bonds and other assets shrank for a fourth straight week, sliding below $7 trillion, and use of one key emergency liquidity measure dropped to zero in the latest sign that financial stresses that erupted early in the coronavirus pandemic have eased.
The Fed’s total balance sheet size declined by about $88 billion to $6.97 trillion as of July 8 versus $7.06 trillion a week earlier, data released on Thursday by the central bank showed.
It was the largest weekly drop in more than 11 years, and the main driver was the balance of outstanding repurchase agreements - or repos - which fell to zero from $61.2 billion a week earlier. It was the first time in 10 months that banks have not tapped the Fed for this key source of short-term funding.
· Biden says his economic plan would create five million new U.S. jobs
Presumptive Democratic presidential nominee Joe Biden promised on Thursday to spend $700 billion on American-made products and industrial research, which he said would give at least 5 million more people a paycheck during a job-killing pandemic.
· UK retail warns shoppers face higher prices if no EU trade deal
Britain’s retail industry on Friday urged UK and European negotiators to reach a post-Brexit trade deal, warning that without tariff-free trade, consumers face higher prices from next year.
Last week’s round of talks was cut short, with both sides saying that, while they wanted an agreement, they had yet to overcome the gulf in positions that could see Britain leaving the transition period without a trade deal.
In May, the UK government published its new tariff schedule, which would apply from Jan. 1 2021 if a deal was not agreed.
Under the schedule, 85% of foods imported from the EU will face tariffs of more than 5%, including 48% on beef mince and 16% on cucumbers. The average tariff on food imported from the EU would be over 20%.
· IMF, World Bank confirm plans for 'primarily virtual' annual meetings
The leaders of the International Monetary Fund and the World Bank on Thursday confirmed that they were preparing to hold their annual meetings in October largely online given the coronavirus pandemic.
In a joint statement, IMF Managing Director Kristalina Georgieva and World Bank President David Malpass said they were recommending the annual meetings, set for Oct. 12-18, be held in a “primarily virtual format.”
They said they remained flexible about the format of the talks, depending on developments, and would work to accommodate the needs of their members.
· Oil drops 3% as rising Covid-19 cases spur demand fears
Concerns about renewed coronavirus lockdowns in the United States outweighed signs of a recovery in U.S. gasoline demand on Thursday to keep a lid on oil prices.
The market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Brent crude futures were down 90 cents, or 2%, at $42.39 per barrel, after gaining 0.5% on Wednesday. West Texas Intermediate crude futures slipped $1.28, or 3.13%, to settle at $39.62 per barrel, after rising 0.7% the previous day.
“Support will disappear after this week as coronavirus cases are surging in several U.S. states,” Tamas Varga at PVM Oil Associates said, adding that a fall in prices was likely.
That kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.
· North Korean leader's sister says another summit unlikely but no threat posed to U.S
Kim Yo Jong, the sister of North Korea’a leader, said another summit with the United States would only be useful for Washington at this point, but added that her country had no intention of “threatening the U.S.,” according to state media.
Reference: CNBC, Reuters, Worldometers
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