· Aussie, kiwi, and yuan fall on worries about second wave of coronavirus
The Australian and New Zealand dollars fell against their U.S. counterpart on Monday as fears of a second wave of the coronavirus in Beijing prompted investors to sell currencies sensitive to risk.
The Chinese yuan also dipped in offshore trade after Beijing recorded dozens of new cases of the novel coronavirus in recent days, all linked to a major wholesale food market.
The British pound declined against the greenback due to concerns trade negotiations between Britain and the European Union are not making enough progress.Sterling shed 0.2% to trade at $1.2514.
Traders are also monitoring a spike in coronavirus cases in the United States, as fears grow that another outbreak could inflict greater damage on the global economy.
The Australian dollar fell 0.36% to $0.6828, while the New Zealand dollar declined by 0.43% to $0.6420.
Beijing is ramping up testing after a cluster of new coronavirus cases was confirmed at Xinfadi, which is said to be the largest food market in Asia.
China’s capital had gone for almost two months with very few infections until a new case was reported on June 12, and since then the total number has climbed to 51.
Another large outbreak could roil financial markets, which had been rallying recently on hopes for economic recovery.
The onshore yuan was little changed at 7.0882 per dollar. In the offshore market, the yuan fell to 7.0865, highlighting the sense of concern about the outlook.
The yuan did not budge after data showed Chinese industrial production and retail sales missed economists estimates in May.
The British pound fell after a report that British officials told their EU counterparts they will not extend the deadline for trade talks beyond the end of this year.
Some investors worry Britain’s economy could be thrown into chaos if it does not agree new terms with the EU.
The dollar was little changed at 107.25 yen as investors avoided big moves before a Bank of Japan policy meeting ending Tuesday.
No major changes are expected, but some investors may focus on Governor Haruhiko Kuroda’s views on growing interest in its yield curve control policy.
U.S. central bankers discussed the option of adopting yield curve controls to cap bond yields, Federal Reserve Chairman Jerome Powell said last week.
Europe starts to reopen borders but no free travel yet
European countries ease some border controls on Monday after corona virus lockdowns, but Spain’s continued closure, a patchwork of restrictions elsewhere and new ways of working mean pre-pandemic levels of travel are a long way off.
The Schengen area of 22 EU countries plus Iceland, Liechtenstein, Norway and Switzerland operates control-free crossings, but they have been mostly closed for three months to all but goods traffic and critical workers.
European Home Affairs Commissioner Ylva Johansson urged Schengen members last week to lift internal border controls by Monday, to allow a gradual reopening to other countries from July
· French health minister: Worst of epidemic behind us, but virus not dead
The worst part of the coronavirus epidemic is behind France, but people must remain vigilant as the virus continues to circulate, Health Minister Olivier Veran said on Monday.
· China's factory output perks up but consumers stay cautious
China’s factories stepped up production for a second straight month in May, as the country shook off the economic torpor of the coronavirus, although the weaker-than-expected gain suggested the recovery remained fragile.
Industrial output growth quickened to 4.4% in May from a year earlier, the highest reading since December, official data showed on Monday. Analysts polled by Reuters had expected a 5.0% rise from 3.9% in April, the first expansion since the virus emerged in China late last year.
But a collapse in export orders amid global lockdowns has left factories more reliant on domestic demand, which is recovering at a more sluggish pace.
Retail sales fell for a fourth straight month. While the 2.8% drop was smaller than the 7.5% slump in April, it was larger than the 2.0% fall tipped by analysts. Heavy job losses and fears of a second infection wave have kept consumers cautious.
· India shut down its economy to contain the coronavirus. It’s now one of the most affected countries
India’s coronavirus cases have spiked in recent days, fueling concerns the situation could spiral out of control even as the country starts to reopen after weeks of stringent lockdown.
India is the fourth worst-hit nation in the world, with cumulative infection numbers over 320,000 — behind only the United States, Brazil and Russia, according to Johns Hopkins University data.
· Oil drops as new coronavirus outbreaks raise fuel demand concerns
Oil fell more than 2% on Monday, extending losses from last week, as new coronavirus infections hit China and the United States, raising the prospect that renewed outbreaks of the virus could weigh on the recovery of fuel demand.
Brent crude futures fell 89 cents, or 2.3%, to $37.84 a barrel by 0302 GMT, while U.S. West Texas Intermediate crude futures were down $1.18, or 3.3%, to $35.08 a barrel.
A cluster of infections in Beijing has increased concern of a resurgence of the disease. The coronavirus pandemic started at the end of last year in the Chinese city of Wuhan.
The oil benchmarks fell about 8% last week, their first weekly declines since April, as U.S. coronavirus cases started increasing. Over the weekend, more than 25,000 new U.S. cases were reported on Saturday alone as more states reported record new infections and hospitalizations.
Reference: Reuters, CNBC
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