· Dollar edges higher as four-day euro rally fizzles
The dollar edged higher against a basket of peers on Thursday as investors weighed the impact of the global economic lockdown, and the euro’s four-day rally against the U.S. currency on optimism about a closer fiscal union in Europe ran out of steam.
The U.S. Dollar Currency Index, which measures the greenback’s strength against six major currencies, was up 0.2% at 99.385.
Data on Thursday showed millions more Americans filed for unemployment benefits last week as backlogs continue to be cleared and disruptions from the novel coronavirus unleash a second wave of layoffs, pointing to another month of staggering job losses in May.
The greenback, which draws investors in times of economic uncertainty, has weakened since hitting a more than three-year high in March as central bank interventions have eased international dollar shortage and investors have gravitated toward risky assets.
The euro, which rose 1.6% over the last four sessions, helped by France and Germany’s recent proposal for a 500-billion-euro ($543 billion) recovery fund to offer grants to regions and sectors hit hardest by the coronavirus pandemic, was 0.21% lower at $1.0956.
The pound was about flat on the day against the dollar but remains under pressure amid worries that the Bank of England may cut interest rates below zero.
· Jobless claims total 2.4 million, still elevated levels but a declining pace from previous weeks
First-time filings for unemployment insurance totaled 2.44 million last week as the tail effects of the coronavirus shutdown continued to impact the U.S. jobs market.
Economists surveyed by Dow Jones had been looking for 2.4 million claims.
The seasonally adjusted total, while still well above anything the nation had seen in pre-coronavirus America, represents the seventh straight week of a declining pace following the record peak of 6.9 million in late March.
In addition, a review from last week brought the number down substantially, from 2.98 million to 2.69 million. In the nine weeks since the coronavirus-induced lockdown has closed large parts of the U.S. economy, some 38.6 million workers have filed claims.
· May unemployment was worse than expected and could signal another bad jobs report
Economists were hoping the number of Americans continuing to receive unemployment benefits would flatten out or even dip in the latest government weekly report. But the fact it rose by 2.5 million to 25 million, for the week ending May 9, suggests state reopenings or government aid to small business were not yet resulting in a lot of rehirings.
The continuing unemployment data trails by one week data on new claim filings, which totaled 2.4 million in the week ending May 16, down slightly from 2.7 million the week earlier. Jefferies economists said the claims data suggests that the employment picture in May was worse than expected, and their model shows job losses of 10.3 million for the month. That number is not their official forecast, as they await more data. They expect a hiring rebound in June.
· Fed's Powell says US economy faces 'whole new level' of uncertainty amid coronavirus pandemic
Federal Reserve Chairman Jerome Powell said Thursday the U.S. economy is facing an unprecedented level of uncertainty as a result of the coronavirus outbreak, which has triggered the worst economic catastrophe since the Great Depression.
“We are now experiencing a whole new level of uncertainty, as questions only the virus can answer complicate the outlook," Powell said Thursday during prepared remarks for a virtual Fed Listens event.
The U.S. central bank chief said the economic downturn has been "sudden and severe" -- but noted the fallout is disproportionately affecting low-income Americans.
"And while the burden is widespread, it is not evenly spread. Those taking the brunt of the fallout are those least able to bear it," he said.
· Georgia reopening has been ‘a mixed bag,’ Atlanta Fed President Bostic says
Atlanta Fed President Raphael Bostic called the state’s reopening a “mixed bag” of some who are ready to “get back to where they were pre-crisis” and others who are still afraid to go out.
· Fed's Bostic: Banks should be preserving as much capital as possible - CNBC
U.S. banks should be preserving as much capital as they possibly can amid the coronavirus outbreak and should perhaps decide against dividend payments, Atlanta Federal Reserve Bank President Raphael Bostic said on Thursday.
· Next U.S. coronavirus rescue package not too far off, McConnell says
U.S. Senate Republican leader Mitch McConnell said on Thursday another stimulus package to deal with the impact of the coronavirus was “not too far off.”
“I think there is a high likelihood we will do another rescue package,” McConnell told Fox News Channel in an interview.
“But we need to be able to measure the impact of what we’ve already done, what we did right, what we did wrong ... We’re not quite ready to intelligently lay down the next step, but it’s not too far off.”
· Trump says he won’t close the country if second wave of coronavirus hits
President Donald Trump on Thursday said “we are not closing our country” if the U.S. is hit by a second wave of coronavirus infections.
“People say that’s a very distinct possibility, it’s standard,” Trump said when asked about a second wave during a tour of a Ford factory in Michigan.
“We are going to put out the fires. We’re not going to close the country,” Trump said. “We can put out the fires. Whether it is an ember or a flame, we are going to put it out. But we are not closing our country.”
· New York City mayor says ‘all roads are leading’ to begin reopening in first half of June
New York City is on track to begin its phased reopening in the first half of June as the number of people admitted to the city’s hospitals and those currently in intensive-care units for Covid-19 continues to decline, Mayor Bill de Blasio said.
The percentage of people citywide testing positive for Covid-19 has remained below 15% for 10 days now, he said. For more than a week, the city has been around or below the annual average for people administered to the hospitals for the category of diseases related to the coronavirus, which is “very powerful,” De Blasio said.
· China set to impose new Hong Kong security law, Trump warns of strong U.S. reaction
China is set to impose new national security legislation on Hong Kong after last year’s pro-democracy unrest, a Chinese official said on Thursday, drawing a warning from President Donald Trump that Washington would react “very strongly” against the attempt to gain more control over the former British colony.
The U.S. State Department also warned China, saying a high-degree of autonomy and respect for human rights were key to preserving the territory’s special status in U.S. law, which has helped it maintain its position as a world financial centre.
· 70% of Dubai companies expect to go out of business within six months due to coronavirus pandemic, survey says
A staggering 70% of businesses in Dubai expect to close their doors within the next six months as the coronavirus pandemic and global lockdowns ravage demand, a survey by the Dubai Chamber of Commerce revealed Thursday.
The Chamber surveyed 1,228 CEOs across a range of sectors between April 16 and April 22, during the emirate’s strictest lockdown period. Nearly three-quarters of those surveyed were small businesses with fewer than 20 employees. Of the respondents, more than two-thirds saw a moderate-to-high risk of going out of business in the coming six months: 27% said they expected to lose their businesses within the next month, and 43% expect to go out of business within six.
· UK PM Johnson orders for plans to end reliance on Chinese imports: The Times
British Prime Minister Boris Johnson has instructed civil servants to make plans to end UK's reliance on China for vital medical supplies and other strategic imports in light of the coronavirus outbreak, The Times newspaper reported on Friday.
· UK consumer confidence back at joint lowest level since 2009: GfK
British consumer confidence in early May dipped back down to its joint-lowest level since the global financial crisis in 2009, despite moves by the government to start loosening its coronavirus lockdown, a survey showed on Friday.
· Brazil to boost aid for informal workers, formal jobless insurance claims surge 76.2%
The mounting pressure on Brazil’s workforce from the unfolding economic crisis during the new coronavirus outbreak was highlighted on Thursday as figures showed a 76% surge in formal unemployment insurance claims, and the Economy Ministry said it will increase emergency aid for informal workers.
Latin America’s largest economy is expected to shrink more than 5% this year, its steepest economic downturn since records began in 1900, and central bank president Roberto Campos Neto said this week that the unemployment rate will likely exceed 15%.
Economy Ministry figures showed that formal unemployment insurance claims in the first two weeks of May totaled 504,313, a rise of 76.2% from the same period a year earlier.
· Brazil emergency measures to have 4.7% of GDP impact on budget: official
Brazil’s emergency measures to support the economy during the coronavirus pandemic will have a 344.6 billion reais ($62 billion) impact on this year’s primary budget balance, worth 4.7% of gross domestic product, according to an Economy Ministry presentation on Thursday.
· Russian economy to contract, rouble to stay weak amid pandemic: economy ministry
Russia’s economy is on track to shrink by 5% in 2020 and the rouble will remain weak as the novel coronavirus pandemic and low oil prices hit home, the economy ministry said on Thursday.
· Bank of Canada governor says interest rates will probably stay low
Bank of Canada Governor Stephen Poloz said on Thursday that interest rates were probably going to stay low and that the damage done by the coronavirus outbreak might not be as bad as some fear.
Poloz, who is retiring next month, said he felt Canada was still on track to meet the best-case scenario for recovery that the central bank released in April, where growth shrinks by 15% in the second quarter compared with the fourth quarter of 2019 before the coronavirus pandemic.
The bank - which targets 2% inflation - has slashed its key overnight interest rate three times to a record-low 0.25% since the crisis started and markets do not expect another move before next year.
· Bank of Japan to create its version of Fed's 'Main Street' lending scheme
Japan’s central bank will create its own version of the U.S. Federal Reserve’s “Main Street” lending programme to channel more money to small businesses, in a bid to keep the coronavirus pandemic from pushing the economy deeper into recession.
The decision, to be made at an emergency meeting on Friday, underscores concerns in Tokyo that without stronger steps to pump credit to cash-strapped firms, the pandemic could lead to a spike in bankruptcy and job losses.
· Japan's core consumer prices fall for first time in three years
Japan’s core consumer prices fell for the first time in more than three years in April on an annual basis, as weak oil prices and coronavirus lockdown measures heightened deflation risks.
The April data was released shortly before the Bank of Japan (BOJ) kicked off an emergency policy meeting on Friday at which it is expected to set up a reward scheme for financial institutions that boost lending to small firms hit by the pandemic.
The weak price reading comes after the virus knocked the world’s third-largest economy into recession in the first quarter, as consumer and business activity slumped, derailing the BOJ’s efforts to achieve its elusive 2% inflation target.
· Oil jumps to highest level since March on lower U.S. inventories, recovering demand
Oil prices rose to the highest level since March on Thursday, supported by lower U.S. crude inventories, OPEC-led supply cuts and recovering demand as governments ease restrictions imposed on people’s movements due to the coronavirus crisis.
Crude prices have slumped in 2020, with Brent hitting a 21-year low below $16 a barrel in April as demand collapsed. With fuel use rising and more signs that the supply glut is being tackled, Brent has since more than doubled.
Brent rose 31 cents, or 0.87%, to settle at $36.06 per barrel, while West Texas Intermediate crude gained 43 cents, or 1.28%, to settle at $33.92 per barrel.
Reference: CNBC, Reuters, Worldometers, Foxbusiness
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