· Dollar weak as improved risk appetite, EU recovery fund hopes lift euro
The U.S. dollar fell against the euro for the third straight day on Thursday as the common currency continued to bask in the glow of the recently announced 750 billion-euro ($828.90 billion) coronavirus recovery fund amid improved risk appetite, leading investors to favor riskier assets.
The euro was 0.49% higher against the greenback at 1.1057. The single currency has risen 1.5% over the past three sessions.
The EU executive unveiled a plan on Wednesday to support economies hammered by the pandemic, hoping to end months of squabbling over how to fund a recovery. Overnight implied volatility gauges inched up to hit a one-month high above 8%, suggesting investors were prepared for unexpected moves in the common currency.
The dollar, which usually draws safe-haven flows in times of economic uncertainty, found little support on Thursday after the Labor Department reported another 2.1 million people filed for unemployment benefits in the week ended May 23, down 323,000 from the prior week.
The U.S. Dollar Currency Index, which measures the greenback’s strength against six other major currencies, was down 0.36% at 98.555, its weakest in nearly two months.
· China parliament advances Hong Kong security law as U.S. tensions rise
China’s parliament on Thursday approved a decision to go forward with national security legislation for Hong Kong that democracy activists and Western countries fear could erode the city’s freedoms and jeopardise its role as a global financial hub.
China says the new legislation will aim to tackle secession, subversion, terrorism and foreign interference in the city. But the plan, unveiled in Beijing last week, triggered the first big protests in Hong Kong for months.
Thursday’s move was quickly condemned by the United States, Britain, Australia and Canada. U.S. President Donald Trump’s economic adviser warned that Hong Kong, which has enjoyed special privileges under U.S. law based on its autonomy from Beijing, may now need to be treated like China when it comes to trade and other financial matters.
Trump, who has vowed a tough U.S. response, told reporters he would hold a news conference on China on Friday. “We’ll be making certain decisions and we’ll be discussing them tomorrow,” he said.
Under congressional legislation Trump signed last year, it now falls to him to decide to end some, all or none of the U.S. economic privileges Hong Kong enjoys.
· China plays up business opportunities amid increasing U.S. protectionism
Chinese Premier Li Keqiang used a key meeting Thursday to highlight the opportunities China offers to foreign businesses, in the wake of the coronavirus shock to the global economy.
His comments come as tensions between the U.S. and China continue to escalate.
The highlights for the roughly week-long National People’s Congress meeting included discussions on economic priorities and stimulus, and the passing of a new legislation on Hong Kong. The high-level annual meeting comes as China faces the new challenges brought on by the coronavirus epidemic.
One of the first major announcements at this year’s parliamentary meeting was that the world’s second-largest economy would not announce an annual GDP growth target for the first time in decades.
Li cited the uncertain impact of the coronavirus pandemic, which first emerged late last year in the Chinese city of Wuhan and has since infected more than 5.6 million people worldwide.
· Trump move could scrap or weaken law that protects social media companies
President Donald Trump said he will introduce legislation that may scrap or weaken a law that has protected internet companies, including Twitter and Facebook, in an extraordinary attempt to regulate social media platforms where he has been criticized.
The proposed legislation is part of an executive order Trump signed on Thursday afternoon. Trump had attacked Twitter for tagging his tweets about unsubstantiated claims of fraud about mail-in voting with a warning prompting readers to fact-check the posts.
Trump wants to “remove or change” a provision of a law known as section 230 that shields social media companies from liability for content posted by their users.
· Japan April retail sales fall 13.7% year/year: government
Japanese retail sales slumped 13.7% in April from a year earlier, compared with a median market forecast for an 11.5% decline, government data showed on Friday.
· Japan’s jobless rate rises to 2.6% in April: government
Japan’s jobless rate rose and the availability of jobs fell in April, government data showed on Friday.
The seasonally adjusted unemployment rate was 2.6% in April, up from 2.5% in March, figures from the Ministry of Internal Affairs and Communications showed. The median forecast was 2.7%
· Oil jumps more than 2% to reverse early losses on higher U.S. gasoline demand, refinery runs
Oil futures rose on Thursday, erasing earlier losses, on signs U.S. gasoline demand is rising despite a big surprise build in crude inventories and worries that China’s new Hong Kong security law could result in trade sanctions.
The U.S. Energy Information Administration (EIA) said crude inventories rose 7.9 million barrels in the latest week, exceeding expectations, due to a big increase in imports. Gasoline stockpiles fell unexpectedly, but refiners boosted output.
Oil prices have rebounded in recent weeks on anticipation of improved demand after the coronavirus pandemic sapped worldwide consumption roughly 30%. Overall investment is dropping and U.S. production cuts are balancing out the supply glut, but demand still has not bounced back entirely.
On its second to last day as the front-month, Brent futures for July delivery rose 55 cents, or 1.6%, to settle at $35.29 a barrel. West Texas Intermediate crude rose 90 cents, or 2.7%, to settle at $33.17 per barrel.
Reference: CNBC, Reuters
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