· EU deal and coronavirus vaccine hopes keep U.S. dollar at bay
The euro marked a fresh four-month high and commodity currencies found support on Tuesday, after European countries agreed on a rescue package for the bloc’s coronavirus-hit economies.
The hard-won deal - a compromise on concerns that thrifty northern states had about handouts for more profligate neighbors - was hailed as an important signal of unity by Europe’s leaders and as a foundation for recovery.
It pushed the euro higher to , its strongest since early March, although it soon retreated back to just below flat since the agreement was widely expected.0.2%$1.1470
Against a basket of currencies, the dollar made a fresh four-month trough at and struggled for headway in the Asian session.95.634
The Japanese yen was steady at per dollar.107.21
· At Least $1 Trillion Is Needed to Avert U.S. Disaster, Economists Say
A crisis can stretch for weeks, months, even years, but arc can be shaped by a few crucial moments in which political leaders choose a course of action.
For a U.S. economy still reeling from the devastation of the novel coronavirus, one such moment is approaching.
Economists are warning the nation is in danger of careening off a fiscal cliff unless Congress approves a rescue package to succeed the $2 trillion Cares Act. Key elements of that are set to expire this month, just as a resurgence of the virus in states that rushed to reopen their economies is making the nascent recovery look decidedly vulnerable. The Trump administration is calling on Republicans and Democrats to get legislation passed before the start of the summer recess in August.
“If Congress fumbles this, it’ll be a pretty big setback for the economy,” says Michael Feroli, chief U.S. economist for JPMorgan Chase & Co., the country’s largest bank.
· EU leaders reach deal on post-pandemic recovery package for economy
European Union leaders reached a deal on Tuesday morning on a post-pandemic recovery package for the economy of the 27-nation bloc offering 750 billion euros in grants and loans to counter the effects of the COVID-19-indiced recession, officials said.
“Conclusions adopted!” one official present at the summit said.
· October Brexit deal still possible, but ambitious, German foreign minister says
The aim of reaching an agreement between Britain and the European Union on future ties between the two by October is ambitious but achievable, German Foreign Minister Heiko Maas said on Tuesday.
“An agreement on the basis of the Political Declaration is sporty but still possible,” he said in a statement.
· Spain's coronavirus rate triples in three weeks after lockdown easing
The prevalence of the novel coronavirus in Spain has risen three-fold over the last three weeks as authorities struggle to contain a rash of fresh clusters, mainly in the Catalonia and Aragon regions, Health Ministry data showed on Monday.
After registering thousands of cases and hundreds of deaths per day during an early April peak, Spain succeeded in slowing the number of new infections to a trickle.
· Japan's core consumer prices flat, deflation risks remain
Japan’s core consumer prices snapped two straight months of declines in June but risks remain for a prolonged economic slump from the coronavirus crisis, which has depressed consumption and raised concerns about a return to deflation.
The core consumer price index (CPI) was flat, with slower falls in energy prices in June helping the gauge out of negative territory. The reading dashed expectations for a third straight month of decline and followed central bank comments last week that the economy would likely shake off the hit from the pandemic.
Japan lifted nationwide state of emergency measures in late May but has seen a renewed spike in infections in its capital Tokyo, stoking fears of a second wave of infections that could curtail spending in an already weakened economy.
The core CPI, which includes oil products but excludes volatile fresh food prices, was flat in June from a year earlier, government data showed on Tuesday.
That compared with the median market forecast of a 0.1% decline and falls of 0.2% reported in both April and May.
The so-called core-core price index, which excludes food and energy prices and is closely tracked by the central bank as a narrower gauge of inflation, grew 0.4% in June after the same rate of gain in May.
The Bank of Japan’s (BOJ) latest quarterly forecasts showed consumer prices projected to fall 0.5% this fiscal year to next March and stay well below its 2% target through early 2023.
The economy likely contracted more than 20% in April-June as the coronavirus hit global growth and the government shut down the economy from April to late May.
· South Korea GDP poised for sharpest contraction in over 20 years in second quarter: Reuters poll
South Korea’s economy likely saw its biggest contraction in over 20 years in the second quarter, a Reuters poll showed on Tuesday, as the coronavirus pandemic hit consumer spending, the labour market, and global demand for its exports.
Asia’s fourth largest economy is expected to have shrunk a median 2.0% in the April-June period from a year ago, according to a poll of 19 economists, its sharpest contraction since 1998. The economy grew 1.4% in the first quarter of 2020.
On a quarter-on-quarter basis, gross domestic product (GDP) likely shrank a seasonally adjusted 2.3% in the same period, its biggest quarterly fall since late 2008, after contracting by 1.3% in the first three months of the year.
· Oil Gains as Vaccine Edge Out Rise in Infections
Oil prices edged higher on Tuesday on positive news on vaccine trials, but are still within the narrow trading band of the past three weeks amid fears that new lockdowns could derail a recovery in demand.
Brent futures were up 21 cents, or 0.5%, at $43.49 by 0623 GMT, while West Texas Intermediate (WTI) gained 11 cents to $40.92.
The closing prices of both Brent and WTI have traded within a $2 channel so far this month.
Prices were supported by promising vaccine developments as drugmakers and medical institutions to find a way to counter the world's worst health crisis in a century.
In China, some cinemas reopened on Monday after a six-month closure, raising hope a recovery from the pandemic is holding in the world's second-largest economy, where the outbreak first started.
Reference: Reuters, CNBC, Bloomberg
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