· Dollar on front foot as worries about Hong Kong stir risk aversion
The dollar edged higher on Monday as worries about a standoff between the United States and China over civil liberties in Hong Kong fuelled demand for safe-haven currencies.
The yuan and the Australian and New Zealand dollars fell as risk-aversion hit foreign exchange markets.
Sterling was on the defensive after members of British Prime Minister Boris Johnson’s party called for the resignation of an influential aide for breaking travel restrictions during the coronavirus lockdown.
A senior White House official has said Beijing’s plan to impose a security law on the former British colony of Hong Kong could lead to U.S. sanctions, which could worsen an already tense relationship between the world’s two-largest economies.
The U.S. dollar traded at 99.906 against a basket of its peers at 3:17 p.m. HK/SIN, a touch higher than its previous close at 99.863.
The dollar edged up to $1.0887 against the euro on Monday, close to its strongest in a week.
The dollar bought 0.9729 Swiss franc, also close to a one-week high.
The greenback held steady at 107.72 yen.
In onshore trade, the yuan eased slightly to 7.1422 per dollar, approaching the lowest in more than seven months.
Trading may be subdued on Monday with financial markets in Singapore, Britain and the United States closed for public holidays.
China’s proposed national security legislation for Hong Kong could lead to U.S. sanctions and threaten the city’s status as a financial hub, White House National Security Adviser Robert O’Brien said on Sunday.
Hong Kong police fired tear gas and water cannons to disperse thousands of people who rallied on Sunday to protest Beijing’s national security law.
Washington and Beijing are also at loggerheads over Chinese companies’ access to advanced technology and criticism of China’s response after the novel coronavirus emerged late last year in Hubei.
The threat of sanctions over Hong Kong risks a repeat of last year’s damaging trade war between the United States and China.
The British pound was little changed at $1.2175. Against the euro, sterling traded at 89.46 pence.
· WHO warns of 'second peak' in areas where COVID-19 declining
Countries where coronavirus infections are declining could still face an “immediate second peak” if they let up too soon on measures to halt the outbreak, the World Health Organization said on Monday.
The world is still in the middle of the first wave of the coronavirus outbreak, WHO emergencies head Dr Mike Ryan told an online briefing, noting that while cases are declining in many countries they are still increasing in Central and South America, South Asia and Africa.
Ryan said epidemics often come in waves, which means that outbreaks could come back later this year in places where the first wave has subsided. There was also a chance that infection rates could rise again more quickly if measures to halt the first wave were lifted too soon.
· Trump threatens to move Republican convention over COVID-19 restrictions
U.S. President Donald Trump warned on Monday that he may move the Republican National Convention set for August from North Carolina if the event faces state social distancing restrictions due to the coronavirus.
The COVID-19 pandemic has forced Trump and presumptive Democratic nominee Joe Biden to halt campaign rallies. Some have raised concerns that the large formal nominating conventions that are typically packed with delegates could raise safety issues.
Trump said on Twitter that if Democratic Governor Roy Cooper does not immediately answer “whether or not the space will be allowed to be fully occupied,” then the party will find “with all of the jobs and economic development it brings, another Republican National Convention site.”
· Taiwan’s Tsai pledges support for people of Hong Kong after China proposes national security law
Taiwanese President Tsai Ing-wen said late on Sunday that the self-ruled democratic island “stands with the people of Hong Kong” as she pledged “necessary assistance” to Hong Kongers who need help.
Tsai commented on the situation in a Facebook post after China introduced a draft national security law for Hong Kong that would bypass the city’s legislature. The measure prompted protests in the financial center over the weekend, reigniting concerns over eroding freedoms in the special administrative territory.
· Singapore cuts 2020 economic forecasts for the third time on coronavirus concerns
Singapore drastically downgraded its economic forecast for 2020 after its coronavirus-hit economy contracted in the first quarter of the year, official data showed on Tuesday.
The Singapore economy is now expected to shrink by between 4.0% and 7.0% this year, according to the Ministry of Trade and Industry. That’s the third official downgrade in economic forecasts this year. The last projection was for a gross domestic product contraction of between 1.0% and 4.0%.
That came as the Southeast Asian economy registered a 0.7% contraction in the first quarter from a year ago, the ministry said. That’s better than the official preliminary estimates of a 2.2% fall in GDP and the 1.5% contraction forecast by analysts in a Reuters poll.
· Merkel's conservatives want stimulus package to include tax relief: document
Chancellor Angela Merkel’s conservatives are in favour of bringing forward tax relief measures worth at least 5 billion euros to help companies and consumers recover more quickly from the coronavirus pandemic, a document showed on Monday.
Merkel’s coalition government, which in March approved an unprecedented 750 billion-euro rescue package to shield Europe’s largest economy from the impact of the coronavirus, is due next week to present additional stimulus to sustain the recovery.
· Some euro zone central banks need to do more, others less: ECB's Villeroy
Some euro zone central banks must be prepared to buy more bonds and others fewer to ensure the smooth transmission of the European Central Bank’s monetary policy, ECB policymaker Francois Villeroy de Galhau said on Monday.
The ECB has mobilised a range of unprecedented measures to mitigate the recession that the euro zone has sunk into due to fallout from the coronavirus outbreak.
Villeroy said that the flexibility of its 750 billion euro ($817 billion) Pandemic Emergency Purchase Scheme - the flagship bond buying scheme during the crisis - made it the instrument of choice to deal with the crisis.
Under that programme the ECB can target its bond purchases at countries seeing sharper rises in yields like Italy, whose spreads over ultra-safe German bonds blew out during the coronavirus crisis.
Normally euro zone central banks carry out such bond purchases in sync with each of the 19 euro member countries’ shareholding in the bank, known as the capital key.
· Oil steadies as demand uncertainty tempers supply cuts
Oil prices edged up on Monday in sluggish trading with holidays in Singapore, London and New York, as rising concerns over demand recovery offset supply cuts.
Brent rose to $35.81 a barrel by 1659 GMT, while U.S. oil was flat at $33.74 a barrel. Both are down around 45% so far this year. There is no U.S. settlement because of the Memorial Day holiday.
Reference: Reuters, CNBC
Thai
Eng