· Dollar set for second week of losses on Biden win bets; yuan gains
The dollar edged lower on Friday and was headed for a second consecutive week of losses as investors increased bets Joe Biden would win the U.S. presidency and offer fiscal stimulus after the elections.
Several Wall Street banks forecast some kind of stimulus package no matter which candidate wins, but say a Biden presidency, if Democrats also retake control of the U.S. Senate, would be likely to result in a bigger one. UBS Asset Management, for example, is assigning a 75% probability of a Biden win.
Reuters/IPSOS polling this week put Biden, a Democrat, narrowly ahead of Republican President Donald Trump in five states - Wisconsin, Pennsylvania, Michigan, Florida and Arizona - that will play critical roles in deciding the victor.
Rising expectations of a Biden victory has had a calming effect on market volatility around the U.S. election date and boosted appetite for currencies which have been hurt by the trade war between Washington and Beijing.
The dollar eased <0.1%> against a basket of currencies =USD at 93.47 and it is down 0.4% for the week. It fell 0.8% last week. It reached a two-month high at 94.75 in late September.
The Chinese currency was the biggest beneficiary of the rising hopes of a Biden win. The yuan posting its biggest daily rise in more than four years, though the gains were partly catching up after a long break.
A stronger-than-expected setting of the yuan’s trading band also signalled that policymakers in China don’t mind its rise. Biden’s lead in the polls are driving bets on a steadier Sino-U.S. relationship. [CNY/]
The yuan CNY=CFXS was last up 1.2% at 6.7112 per dollar in onshore trade and up half a percent to 6.7024 per dollar offshore CNH=D3.
The euro EUR=EBS was up 0.1% to $1.1776. Sterling GBP=D3 crept 0.2% higher to $1.2961 and has held firm this week as prospects for a Brexit deal appeared to improve.
USD/CNH: Outlook is tilted to the downside – UOB
USD/CNH could move lower and test the 6.7000 level in the next weeks, noted FX Strategists at UOB Group.
· Turkey’s currency drops to record low on Russian missile defense tensions with U.S.
Turkey’s currency dropped to a historic low on Thursday, with the U.S. dollar buying 7.942 lira by late afternoon in Istanbul.
The move is the latest in more than two years of consistent depreciation of the Turkish currency, most recently intensified by Ankara’s involvement in a slew of geopolitical conflicts including Libya and Nagorno-Karabakh, eastern Mediterranean resource disputes and its purchase of Russia’s S-400 missile defense system.
Washington just on Wednesday issued a stern rebuke in response to reports that Turkey was preparing to test the S-400 system, purchased from Russia despite vocal opposition from the U.S. and the rest of Ankara’s NATO allies. Turkey’s defense ministry has not commented on the reports, but condemnation from the State Department was swift.
· Treasury yields rose slightly as traders weigh prospects of new fiscal stimulus
U.S. government debt prices were lower on Friday as traders monitored prospects of new fiscal stimulus in the United States.
At around 2 p.m. ET, the yield on the benchmark 10-year Treasury note rose 22 basis points to trade at 0.7687%, while the yield on the 30-year Treasury bond jumped 32 basis points to trade at 1.5710. Yields move inversely to prices.
· UK economy grew 2.1% in August, below analyst expectations, as recovery from the coronavirus pandemic slows
Friday’s data from the Office for National Statistics (ONS) showed a decline of 9.3% compared to the same period last year, below expectations of a 7.5% contraction. August GDP remained 9.2% lower than the level seen in February, before the full impact of the pandemic.
· Central banks sketch out digital currency as China forges ahead
A group of seven major central banks including the U.S. Federal Reserve set out on Friday how a digital currency could look like to help catch up with China's "trail blazing" and leapfrog private projects like Facebook Inc's FB.O Libra stablecoin.
· China’s recovery isn’t as rosy as it appears — but there’s still ‘room for optimism’
China’s recovery isn’t as rosy as people think — even though the world’s second largest economy has bounced back after a coronavirus-induced slowdown, according to the CEO of research firm China Beige Book, Leland Miller.
· More than 600 million people traveled in China during ‘Golden Week’
The government estimates domestic travelers generated around 466 billion yuan ($68.6 billion) in tourism revenue during the holiday period.
· China joins COVAX initiative for Covid-19 vaccine distribution
China said on Friday it has joined a global Covid-19 vaccine initiative co-led by the World Health Organization, becoming the biggest economy to date to pledge support to help buy and distribute the shots fairly.
· BOJ to start central bank digital currency tests next fiscal year
The Bank of Japan will conduct experiments on basic functions core to issuing central bank digital currencies (CBDCs) as early as possible during the fiscal year beginning in April 2021, the central bank said on Friday.
· Oil prices head for 10% weekly jump as Norwegian supply faces drop
Oil prices eased on Friday, slipping at the end of a week of big gains made on the risk that supplies from Norway could be slashed by up to 25% due to a strike by oilworkers.
Brent was down by 14 cents at $43.20 a barrel by 0740 GMT, having gained more than 3% on Thursday. U.S. West Texas Intermediate (WTI) crude dropped 13 cents to $41.06 after also gaining more than 3% on Thursday.
Both contracts are on track for gains of around 10% this week - the first rise in three weeks - as prices rallied in response to Norwegian oil workers taking strike action.
· North Korea prepares military parade despite coronavirus concerns
Reference: Reuters, CNBC
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