· Dollar heads for weekly gain as new infections sap confidence
The dollar headed for its best week in a month on Friday as a resurgence in coronavirus cases knocked confidence in a rapid economic recovery and drove investors to the safety of the world’s reserve currency.
Geopolitical tensions on the Korean peninsula, in the Himalayas and between China and its trading partners have also weighed, and the balance of risks kept morning moves modest.
The dollar traded near a two-week high against a basket of currencies and has gained about 0.4% for the week, its largest weekly rise since mid-May. That stalled the rally in the risk-sensitive Australian and New Zealand dollars.
“The bulls need new news and inspiration to push prices higher. That inspiration isn’t readily available,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.
The Aussie was steady on Friday at $0.6854 and testing its 20-day moving average. The kiwi slipped to $0.6407, its lowest since Monday. The safe-haven Japanese yen firmed a fraction to 106.90 per dollar.
The British pound sat a fraction above a two-week low at $1.2403, under pressure as investors fretted that the Bank of England may not be planning enough bond buying to support confidence through 2021.
A mixed bag of U.S. economic data overnight also gave investors pause for thought, with a rebound in Atlantic-coast manufacturing offset by weak labor figures.
Elsewhere, the euro was steady at $1.1200, a little above a two-week low of $1.1186 touched on Thursday.
It has lost about 1.3% of its value against the dollar since a Tuesday top as questions grow about the political viability of the European Union’s stimulus plan.
Investors are also keeping a wary eye on Australian trade ties, as relations strain with its biggest trading partner, China, over the handling of the coronavirus outbreak.
· California, Arizona, Florida report all-time high daily spikes
California, Arizona and Florida all reported their largest single-day increases in coronavirus cases since the outbreak began as states ramp up testing and the virus reaches new communities.
Arizona reported 2,519 new cases while Florida reported 3,207, and California reported 4,084 new cases. All numbers represent record highs as the virus takes hold in the American South and West.
The recent surges in several states have prompted some state officials to reverse their stance on the response to the pandemic. After weeks of downplaying the virus and early signs it was surging in the state, Arizona Gov. Doug Ducey acknowledged Wednesday that more aggressive interventions are necessary.
“I said two weeks ago that there is not a trend here,” Ducey said while presenting a chart of daily new cases across the state. “Looking at the last two weeks of data, there is a trend. And the trend is headed in the wrong direction and the actions we’re going to take are intended to change that direction and reverse this trend.”
· UK retail sales rebound in May, public debt passes 100% of GDP
British retail sales rebounded much more strongly than expected last month as the country gradually relaxed its coronavirus lockdown, but public borrowing hit a record high and debt passed 100% of economic output.
Sales volumes in May jumped by a record 12.0% after a historic 18.0% slump in April, official data showed.
The rise was at the top end of economists’ forecasts in a Reuters poll but still left sales 13.1% down on a year ago.
Consumer confidence figures for June were the strongest since the lockdown began but remained weak, a separate survey showed.
Bank of England Governor Andrew Bailey said on Thursday the economy appeared to be shrinking a bit less severely in the first half of 2020 than the BoE feared last month. But there was no guarantee of a strong rebound and unemployment would rise.
· Oil prices inch up on faith in supply cuts, demand recovery
Oil prices pushed higher in early trade on Friday, building on gains in the previous session, after OPEC producers and allies promised to meet their supply cut commitments and two major oil traders said demand was recovering well.
U.S. West Texas Intermediate (WTI) crude futures climbed 14 cents, or 0.4%, to $38.98 a barrel at 0101 GMT, while Brent crude futures crawled up 7 cents, or 0.2%, to $41.58 a barrel. Both contracts rose around 2%on Thursday.
Plans by Iraq and Kazakhstan to compensate for overproduction in May on their supply cut commitments supported the market. The promises came out of a meeting by a panel monitoring compliance by the Organization of Petroleum Exporting Countries and its allies, a grouping called OPEC+.
If the laggard producers do compensate over the next three months for their overproduction, that will effectively take extra barrels out of the market, even if OPEC+ does not extend its record 9.7 million barrels per day supply cut beyond July.
Reference: CNBC, Reuters
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