· Dollar falls on rising euro, higher US stocks
The dollar fell in North American trade on Tuesday as the euro rose on optimism about the possibility of a European Union stimulus package and as U.S. stocks gained.
The U.S. dollar index, which measures the safe-haven greenback against a basket of six rival currencies, was down 0.31% to 96.265. The weaker dollar was partly attributable to a move higher in the euro on hopes the European Union will agree on a rescue financing package that will limit the economic damage to the bloc from the coronavirus pandemic. The euro was up 0.47% at $1.139.
The European Union’s approval of its recovery fund may see the euro test $1.150 with a break leading to a test of crucial resistance levels around $1.180.
· Yuan may weaken to 7.20-7.30 range in the second half of the year: Strategist
Jason Daw of Societe Generale explains why he expects the Chinese yuan to weaken in the coming months, pointing to trade and global uncertainty as factors putting a cap on yuan strength.
· Fed officials warn on 'thick fog' ahead for U.S. economy as recovery concerns deepen
The U.S. economy will recover more slowly than expected amid a surge in novel coronavirus cases across the country, and a broad second wave of the disease could cause economic pain to deepen again, Federal Reserve officials warned on Tuesday.
One by one, Fed policymakers have become more downbeat in recent days, resetting expectations on the recovery and cautioning that recent improvements in economic data such as job gains may be fleeting.
“The pandemic remains the key driver of the economy’s course. A thick fog of uncertainty still surrounds us, and downside risks predominate,” Fed Governor Lael Brainard said in a speech to a virtual event hosted by the National Association for Business Economics.
She called on the U.S. central bank to commit to providing sustained accommodation through forward guidance and large-scale asset purchases, and said additional fiscal support would be “vital” to the strength of the recovery - particularly with the first round of pandemic economic support programs expiring soon.
· Fed’s Kaplan says the U.S. economy will see above-trend growth in 2021
Dallas Federal Reserve President Robert Kaplan said the U.S. economic growth will accelerate next year as the country rebounds from the coronavirus crisis.
“In ’21, we will see an above-trend growth, and we will continue to grind down the unemployment rate,” Kaplan said on CNBC’s “Closing Bell” on Tuesday. “I still believe if we follow these protocols, we would see a rebound from the deep hole we dug in the second quarter.
“The question is when you get to a normalized economy, and it’s going to depend on the path of the virus and how well we manage it, and the timing of the vaccine,” Kaplan added. “I’m optimistic we will work our way through this. But it would be a lot less costly if we did a good job managing the virus.”
· Fed's Harker says U.S. economic downturn is painful and 'stubbornly long-lasting'
Months after the coronavirus arrived in the United States, the economy remains “mired” in crisis and policymakers need to create solutions that offer better support to struggling small businesses, Philadelphia Federal Reserve Bank President Patrick Harker said on Tuesday.
“Indeed, even as the economy is reopening in fits and starts, the pandemic’s effects are proving not to be just a brief setback,” Harker said in remarks prepared for a webinar on small businesses organized by the Fed. “We are in a downturn that is both exceptionally painful and stubbornly long-lasting.”
Harker said the Paycheck Protection Program, which offered loans to small businesses that could be converted to grants, was an “immense help” to millions of businesses. But the Fed official called the program a “blunt instrument,” saying it fell short when it came to aiding businesses in areas hit hard by the virus.
· U.S. seven-day average of new coronavirus cases surpass 60,000 for the first time
The U.S. for the first time surpassed more than 60,000 new coronavirus cases on Monday, based on an average of new cases per day over the previous seven days, according to a CNBC analysis of data compiled by Johns Hopkins University.
Across the country, more than a third of U.S. states reported record highs in daily new cases, based on a seven-day moving average, according to the data. Twenty states, including Florida and Georgia, broke records on Monday with an average of 10,855 and 3,358 new cases, respectively.
Hospitalizations in Texas surged nearly 31% on Monday, based on a seven-day moving average compared with the prior week there . The state also hit a new high in average daily new deaths, reporting approximately 86 deaths per day over the past seven days as of Monday, according to CNBC’s analysis of data compiled by Hopkins.
· Moderna shares jump as much as 16% after company says its coronavirus vaccine trial produced ‘robust’ immune response
Moderna’s shares soared after the company said its potential vaccine to prevent Covid-19 produced a “robust” immune response in all 45 patients in its early stage human trial, according to newly released data published Tuesday evening in the peer-reviewed New England Journal of Medicine.
Moderna’s stock rose more than 16% in after-hours trading on the news.
· CDC says U.S. could get coronavirus under control in one to two months if everyone wears a mask
The United States could get the coronavirus pandemic under control in one to two months if every American wore a mask, a top Centers for Disease Control and Prevention official said Tuesday.
“The time is now,” Dr. Robert Redfield, director of the CDC, said during an interview with the Journal of the American Medical Association’s Dr. Howard Bauchner. “I think if we could get everybody to wear a mask right now I think in four, six, eight weeks we could bring this epidemic under control.”
Both the CDC and the World Health Organization now recommend that people wear masks as a way to slow the spread of the virus, which has infected more than 13 million people worldwide and killed at least 574,600 as of Tuesday, according to data compiled by Johns Hopkins University.
· U.S. could sanction Chinese officials for illegal claims in South China Sea, diplomat says
The nation’s top diplomat for East Asia said in remarks Tuesday that the Trump administration could use sanctions to target Chinese officials’ actions in the hotly contested South China Sea.
“Nothing’s off the table,” David Stilwell, assistant secretary of State for the Bureau of East Asian and Pacific Affairs, said when asked whether the U.S. would consider using sanctions to rein in China.
“There is room for that and this is a language China understands, demonstrable and tangible action,” he told a virtual audience at the Center for Strategic and International Studies.
· Trump signed law slapping sanctions on China for interference in Hong Kong
President Donald Trump said Tuesday that he signed legislation to impose sanctions on China in response to its interference with Hong Kong’s autonomy.
Trump also said that he signed an executive order ending the preferential treatment that Hong Kong has long enjoyed.
“Hong Kong will now be treated the same as mainland China,” Trump said during a lengthy speech in the White House Rose Garden that quickly drifted away from that legislation to touch on a variety of campaign issues.
“No special privileges, no special economic treatment and no export of sensitive technologies. In addition to that, as you know, we are placing massive tariffs and have placed very large tariffs on China.”
· Joe Biden unveils $2 trillion green infrastructure and jobs plan
Former Vice President Joe Biden released a sprawling plan Tuesday to revamp American infrastructure and energy to both curb climate change and spur economic growth.
The presumptive Democratic presidential nominee’s proposal aims to achieve carbon-free power generation by 2035. As the coronavirus pandemic leaves the U.S. mired in an economic crisis, Biden said he will set out to create “millions” of union jobs that pay at least $15 per hour as the U.S. overhauls its roads, bridges, trains, auto industry and broadband system.
The plan, which comes days after a joint task force formed by the Biden and Sen. Bernie Sanders campaigns outlined a climate change agenda, sets out a more ambitious approach to developing clean energy than the Biden campaign did during the Democratic primary. It calls for $2 trillion in spending over four years, more than the $1.7 trillion the campaign previously proposed to spend over a decade.
· Japan manufacturers' mood pinned near 11-year lows as pandemic hammers global demand
Japanese manufacturers remained close to the most pessimistic they have been in 11 years in July as the coronavirus outbreak hits global demand and deals a punishing blow to the export-reliant economy, the Reuters tankan survey showed on Wednesday.
But some firms, in particular those from the service sector, believed conditions would be less negative in the next few months, according to the monthly poll, which tracks the Bank of Japan’s (BOJ) closely watched tankan quarterly survey.
Wednesday’s survey found that sentiment at manufacturers was largely unchanged at minus 44 in July from minus 46 the previous month, which was its lowest reading since June 2009. The service-sector gauge ticked up to minus 26 from minus 32.
· BOJ seen holding policy steady, staying ready to ease if second wave of infections
The Bank of Japan is likely to pause in its crisis-response moves on Wednesday as the economy emerges from the damage caused by COVID-19, but it is also expected to reassure markets it will boost stimulus again if a second wave of infections hits growth.
With markets calm and capital expenditure holding up, the central bank is seen sticking to its view Japan is headed for a moderate recovery later this year. But the outlook is clouded by a renewed rise in infections and soft exports.
“The next test for policymakers will come around autumn,” said a source familiar with the BOJ’s thinking, with the next central bank policy review due in September.
· Oil rises slightly ahead of OPEC+ meeting
Oil prices rose slightly on Tuesday as OPEC and its allies cut production by more than agreed to in June, although demand concerns lingered due to increased cases of COVID-19 in the United States.
Brent crude futures gained 18 cents, or 0.42%, to settle at $42.90 per barrel, after moving lower earlier in the session. West Texas Intermediate crude futures settled 19 cents, or 0.47%, higher at $40.29 per barrel.
The Organization of the Petroleum Exporting Countries and its allies led by Russia, collectively known as OPEC+, have delivered compliance of 107% with their agreed oil output cuts in June, an OPEC+ source said on Tuesday.
The market are keenly awaiting news from OPEC+ on the next level of production cuts. OPEC’s Joint Technical Committee meets on Tuesday, with the Joint Ministerial Monitoring Committee due to meet on Wednesday.
Under the existing supply pact, OPEC+ is set to taper its record production cut of 9.7 million barrels per day (bpd) to 7.7 million bpd from August through December.
Reference: CNBC, Reuters
Thai
Eng