· Euro jumps to four-month peak on hints of progress in debt talks
The euro jumped to a four-month high against the dollar on Monday, boosted by European leaders saying progress was being made in talks to take on debt jointly to help their economies.
The euro gained 0.2% to $1.1452, having risen to as high as $1.14555, its loftiest level since March, as EU leaders appeared within a whisker of breaking an impasse over a proposed 750 billion euro (684.76 billion pounds) recovery fund.
With the marathon talks adjourned until 1600 CET (1400 GMT) on Monday, Austrian Chancellor Sebestian Kurz and Dutch Prime Minister Mark Rutte, leaders from two of the so-called “frugal four”, said progress was being made.
Rutte said talks had been close to failing, but the chairman was now working on a new EU compromise proposal.
“The EU appears to be about to overcome a major hurdle. If they come to an agreement, the euro could look for a new trading range, possibly something like $1.14-$1.16, as opposed to the $1.11-$1.14 range it has been stuck for a while,” said Kyosuke Suzuki, director of forex at Societe Generale.
The dollar index was flat at 95.948, with its advance kept in check as investor risk appetite continues to be strong, underpinned by bets of more stimulus not just from Europe but also the United States.
The Japanese yen eased 0.2% to 107.29 per dollar.
It did not react to Japan’s trade data showing exports in June plunged 26% from a year earlier, worse than expected.
The offshore Chinese yuan held firm at 6.9853 per dollar, only a tad below last week’s four-month peak of 6.9806.
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Dutch PM says progress in EU virus recovery talks, but failure still possible
Dutch Prime Minister Mark Rutte said on Monday EU leaders were making progress towards an agreement on a plan to revive economies throttled by the COVID-19 pandemic, but warned discussions could still fall apart.
“At times it didn’t look good last night, but I feel that on the whole we are making progress,” Rutte told reporters in Brussels.
EU leaders were at an impasse on Monday after three days of haggling over the plan, with summit chairman Charles Michel describing the task as “mission impossible”.
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Japan's sinking exports raise risks of prolonged economic downturn at home and overseas
Japan’s exports plunged at a double-digit pace for the fourth month in a row in June, backing signs the coronavirus crisis has knocked the economy into its worst postwar recession and raising the spectre of a longer and more painful global downturn.
U.S.-bound Japanese shipments nearly halved again due to plummeting demand for cars and autoparts, while exports to China remained weak, pointing to the absence of a strong growth engine for the world economy.
Ministry of Finance (MOF) data showed on Monday that Japan’s exports dived in June from a year earlier, bigger than a decline seen by economists in a Reuters poll. The contraction slowed slightly from the prior month’s fall - the worst downturn since September 26.2%24.9%28.3%2009.
Global demand for cars and other durable goods has sunk since March as the pandemic prompted many countries to lockdown.
· Thai cenbank says could be several years before tourist numbers normalise
Thailand’s central bank chief said on Monday it would take several years for foreign tourist numbers to return to the 40 million a year level, with the coronavirus pandemic hitting a lucrative industry that provides a lot of jobs.
The Bank of Thailand (BOT) expects only 8 million foreign visitors this year, down 80% from a record 39.8 million last year, when foreign receipts accounted for 11.4% of GDP.
The central bank has forecast Southeast Asia’s second-largest economy will shrink by a record 8.1%, with bottom seen in the second quarter, Governor Veerathai Santiprabhob told a seminar.
“It will take about two years for the economy to return to the levels before COVID-19,” he said. “It will be a long check mark recovery”.
The most worrying issue is employment, particularly in the service and manufacturing sector, Veerathai said.
Recent weakness in the baht THB=TH has been driven by capital outflows on economic and political concerns, Veerathai said, adding the currency would remain volatile.
· Oil falls on worries over fuel demand setback as infections rise
Oil prices dropped on Monday, amid concerns that a recovery in fuel demand could be derailed by a rise in the pace of coronavirus infections around the world.
Brent crude LCOc1 was down 36 cents, or 0.8%, at $42.78 a barrel by 0653 GMT, after dropping slightly last week. U.S. oil was off by 34 cents, or 0.8%, at $40.25 a barrel, after gaining 4 cents last week.
More than 14.5 million people have been infected by the novel coronavirus globally and more than 604,000 have died of COVID-19, the disease caused by the pathogen, according to a Reuters tally.
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