· Dollar stands tall as U.S. stimulus delay hits sentiment
The dollar held onto gains against most currencies on Wednesday after U.S. President Donald Trump abruptly cancelled talks on economic stimulus with Democrat lawmakers, heightening demand for safe-haven assets.
The dollar was last quoted at $1.1734 per euro, holding onto a 0.4% gain in the previous session.
Highlighting the peril, Federal Reserve Chair Jerome Powell on Tuesday warned that the U.S. economy could slip into a downward spiral if the coronavirus is not effectively controlled and called for more economic assistance.
Traders will look to minutes from the Fed’s most recent meeting and comments from several Fed speakers for further signs of how central bankers view the outlook.
The increased risk aversion, however, did not move the dollar against the yen, which was last quoted at 105.70, because both currencies tend to be bought during times of uncertainty, analysts say.
Trading in other Asian currencies was mostly subdued, with financial markets in China closed for a public holiday.
Trump has only just returned to work on Monday after three nights in hospital following his bombshell admission last week that he had contracted the coronavirus.
Medical professionals have said Trump’s early discharge from hospital puts others at risk of infection, and its spread among his most senior staff is swinging public opinion against him.
Support for his Democratic rival Joe Biden has grown by about four percentage points since mid-September, according to Reuters/Ipsos polling from October 2 to 6, with 52% of likely voters backing Biden compared to 40% for Trump.
Investors are starting to warm up to the idea of Biden winning the election, which is a positive for the dollar, Mizuho’s Yamamoto said.
· Fauci says White House COVID-19 infections could have been prevented
Top U.S. infectious diseases expert Dr. Anthony Fauci, whose advocacy of public health guidelines to fight the coronavirus has conflicted with President Donald Trump’s downplaying of the pandemic, said on Tuesday the recent rash of infections at the White House could have been prevented.
Several close aides to Trump and senior Republican politicians have tested positive for the coronavirus since the Republican president announced on Friday that he and first lady Melania Trump had contracted the virus.
“Take a look at what happened this week at the White House,” Fauci said in an interview with American University’s Kennedy Political Union, when asked what advice he had about how people could discuss preventive actions with relatives who believed the pandemic was a hoax.
· Trump calls off aid talks, Biden says president 'turned his back' on Americans
U.S. President Donald Trump, still being treated for COVID-19, abruptly ended talks with Democrats on an economic aid package on Tuesday, drawing criticism from presidential rival Joe Biden that he was abandoning Americans in the midst of a pandemic.
· Fed's appetite for further easing, higher inflation in focus
The U.S. Federal Reserve last month signaled that interest rates are likely to stay at zero through 2023, vowing to wait on rate hikes until inflation reaches 2% and is set to rise moderately above that level for a time.
How much above 2%, for how long, and how the central bank might speed the process forward - the new guidance doesn’t say.
Minutes of the Fed’s September meeting to be published Wednesday at 2 p.m. EDT (1800 GMT) should provide a window into the Fed’s internal debate on those issues and, perhaps, some new answers on what it will mean in practice.
· Barclays to enter new European private banking markets in 2021
· Asia’s largest junk bonds are riskier than ever — and Chinese property developers may be feeling the heat
Rising debt of Chinese property developers are in the spotlight again, as liquidity issues at top developer China Evergrande trigger investor concerns.
China’s property prices rebounded quickly as the economy reopened after the worst of the pandemic passed. Still, authorities are expected to officially rein in on borrowing costs of developers — outlining rules that cap the ratios of their debt in relation to their cash flows, assets and capital levels.
A leaked document last month regarding the cash flow of Evergrande, China’s second-largest developer by sales, has further highlighted concerns of the liquidity flows of Chinese developers.
Analysts warn it’s also raised the pressure on the developers’ ability to repay their debts in the bond markets going into 2021.
· China urges U.S. to drop 'Cold War' mentality
China said on Wednesday that the United States should stop its unprovoked attacks and accusations against China, accusing U.S. Secretary of State Mike Pompeo of maliciously creating political confrontation and smearing Beijing.
Pompeo on Tuesday visited Japan and called for deeper cooperation with Australia, India and Japan to counter China’s growing regional influence.
· Japan budget requests hit record of $997 billion, fuelled by pandemic spending
Japan’s ministries have asked for a record $997 billion in initial budget for the next fiscal year, the finance ministry said, as Prime Minister Yoshihide Suga’s new government juggles the need to rein in the pandemic and revive the economy.
The general account spending requests for the fiscal year that begins next April totalled 105.4071 trillion yen ($996.85 billion), exceeding the previous high of 105 trillion sought for the current year.
· Singapore's economic decline seen slowing in third quarter, central bank on hold
Singapore’s economic decline is expected to have slowed significantly in the third quarter as the city-state loosened coronavirus curbs, giving the central bank room to keep monetary settings unchanged when it meets next week.
Gross domestic product (GDP) is expected to contract 6.8% from the same period a year earlier, according to the median forecast of 11 economists in a Reuters poll, marking the third straight quarter of decline. The economy had shrunk 13.2% in April-June - its worst performance on record as the country went into lockdown.
· Australia’s finance minister says government is preparing to invest in the strength of recovery
The government announced its budget a day earlier including billions of dollars’ worth of personal tax cuts for middle-income earners, programs to create jobs and boost employment as well as temporary tax incentives for businesses to start investing again.
· Oil prices fall on U.S. stimulus impasse, rising U.S. crude stockpiles
Oil prices fell on Wednesday after U.S. President Donald Trump dashed hopes for a fourth stimulus package to boost the coronavirus-hit economy and on a larger-than-expected increase in U.S. crude inventories.
U.S. West Texas Intermediate (WTI) crude oil futures declined 42 cents, or 1%, to $40.25 a barrel by 0648 GMT while Brent crude futures fell 30 cents, or 0.7%, to $42.35 a barrel.
Reference: Reuters, CNBC
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