· Dollar stabilizes ahead of earnings, U.S. consumer data
The dollar edged lower on Monday as investors looked to U.S. corporate earnings and upcoming retail data to gauge whether guarded optimism on the economic outlook was justified.
The index that measures the safe-haven dollar against a basket of six other major currencies =USD pared early losses to end the session just 0.07% lower at 96.538.
The dollar ended its third week of losses on Friday as investors bought into risk-sensitive currencies on bets that the worst of the pandemic’s sweeping impact was over.
But on Monday afternoon, California Governor Gavin Newsom ordered a massive retrenchment of the state’s optimistic reopening, shutting bars and banning indoor restaurant dining statewide and closing churches, gyms and hair salons in hardest-hit counties.
While Refinitiv data suggests second-quarter results will show the second-biggest quarterly drop in corporate earnings since 1968, investors maintain some degree of confidence in the U.S. consumer.
Consumer price index data on Tuesday, retail sales data on Thursday and consumer sentiment data Friday are expected to offer insight into how Americans are spending.
The euro rose 0.42% to $1.134 EUR=, maintaining its uptrend since late last month. Looming large for the single currency this week is a European Union summit on July 17-18, at which leaders need to bridge gaps on a long-term budget.
Investors will also watch for whether an agreement on a proposed 750 billion-euro recovery fund for the bloc emerges.
· Surge in U.S. coronavirus cases causes testing delays across the nation as labs scramble to keep up
The surge in U.S. coronavirus cases has labs across the nation falling behind in processing and delivering test results with the turnaround time for Covid-19 tests taking days to a week or longer for many patients, two of the country’s biggest lab diagnostics companies said Monday.
LabCorp, another coronavirus diagnostic test manufacturer, echoed Quest’s concerns, saying that demand for testing is outpacing their capacity. The company said it is processing more than 130,000 tests per day and plans to ramp that up to 150,000 per day by the end of the month.
The U.S. has processed an average of more than 665,000 tests per day between July 1 and July 12, according to a CNBC analysis of data collected by the Covid Tracking Project, an independent volunteer organization launched by journalists at The Atlantic. That’s up from a daily average of just over 174,000 diagnostic tests processed nationally per day through April, according to CNBC’s analysis.
· Drugmakers will start coronavirus vaccine production by end of summer, Trump health officials say
U.S. health officials and drugmakers expect to start producing potential coronavirus vaccine doses by the end of the summer, a senior administration official said Monday.
The U.S. is aiming to deliver 300 million doses of a vaccine for Covid-19 by early 2021. The manufacturing process is already underway even though they aren’t sure which vaccine, if any, will work, a senior Trump administration official told reporters on a conference call Monday. He said they are already buying equipment, securing the manufacturing sites and, in some cases, acquiring the raw materials.
U.S. health officials have previously said they are ramping up the manufacturing process to ensure they can immediately get a vaccine to market once they identify one that works.
· California shuts down again as U.S. coronavirus crisis expands
California’s governor on Monday clamped new restrictions on businesses, and the state’s two largest school districts, Los Angeles and San Diego, said children would not return to class for the new term as coronavirus cases and hospitalizations soared.
Governor Gavin Newsom, a Democrat, ordered bars closed and restaurants, movie theaters, zoos and museums statewide to cease indoor operations. Newsom said churches, gyms and hair salons must close in the 30 hardest-hit counties.
· Federal Reserve's $3 trillion virus rescue inflates market bubbles
The Federal Reserve’s $3 trillion bid to stave off an economic crisis in the wake of the coronavirus outbreak is fuelling excesses across U.S. capital markets.
The U.S. central bank has pledged unlimited financial asset purchases to sustain market liquidity, increasing its balance sheet from $4.2 trillion in February to $7 trillion today.
While the vast majority of these purchases have been limited to U.S. Treasuries and mortgage-backed securities, the Fed’s pledge to bolster the corporate bond market has been enough to spur a frenzy among investors for bonds and stocks.
· Singapore’s economy contracts 12.6% year over year in the second quarter
Singapore’s economy contracted by 12.6% in the second quarter compared to a year ago, according to advance estimates by the Ministry of Trade and Industry released Tuesday.
Analysts polled by Reuters had expected the Southeast Asian economy to shrink by 10.5% year-over-year in the three months ended June 30.
In the first quarter, the Singapore economy registered a 0.7% contraction, according to the ministry.
The economic performance in the second quarter worsened due to the implementation of partial lockdown measures — which the Singapore government called a “circuit breaker” — aimed at reducing the spread of the coronavirus.
· Oil falls 1% ahead of OPEC meeting as spike in Covid-19 cases weighs
Oil prices were modestly lower on Monday as the market waits for direction from an OPEC meeting later this week that is expected to recommend an increase in output.
Weighing on prices were concerns that demand could take a hit if some governments reverse lockdowns after global coronavirus cases rose by a record daily amount.
The World Health Organization reported a record daily increase in global coronavirus cases on Sunday, with the total up by more than 230,000.
In the United States, infections surged over the weekend as Florida reported an increase of more than 15,000 new cases in 24 hours, a record for any state.
Brent futures fell 1 cent to $43.23 a barrel, while West Texas Intermediate crude fell 45 cents, or 1.1%, to settle at $40.10 per barrel.
Oil traders remained on edge as the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) prepares to meet on Tuesday and Wednesday to recommend levels for future supply cuts.
OPEC and allies including Russia, a group known as OPEC+, are expected to ease their production cuts to 7.7 million barrels per day (bpd) after a recovery in global oil demand.
Reference: CNBC, Reuters
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