· Dollar edges higher before quarter-end
The greenback edged higher on Monday as investors positioned for quarter-end and weighed an increase in coronavirus cases in some U.S. states against improving economic data.
Thursday’s jobs report for June was also a factor in portfolio adjustments.
U.S. employers are expected to have added 3 million jobs in June, according to the median estimate of economists polled by Reuters. Projections vary widely among economists, however, from as few as 405,000 jobs to as many as 9 million.
Data on Monday showed that contracts to buy U.S. previously owned homes rebounded by the most on record in May.
Concerns about renewed weakness have grown, however, as Texas, Florida and California are among U.S. states to reverse reopenings and reclose businesses such as bars to slow the spread of the coronavirus.
The dollar index rose 0.08% to 97.56.
The euro gained 0.11% to $1.1229.
The euro’s 50-day moving average moved above its 200-day moving average, known as a “golden cross,” on Friday, which may indicate that the single currency is likely to gain in the coming month or two.
The dollar gained 0.45% against the Japanese yen to 107.69 yen.
Sterling weakened to a one-month low against the greenback on concerns about how Britain’s government will pay for its planned infrastructure program.
There are also doubts about whether Britain will seal a trade pact with the European Union as little progress has been made in agreeing on Britain’s future relationship with the bloc, which it exited on Jan. 31.
The pound was last down 0.41% at $1.2283.
· Fed's Powell stresses uncertainty, challenges facing U.S. economy
U.S. Federal Reserve Chair Jerome Powell on Monday said the outlook for the world’s biggest economy is “extraordinarily uncertain” and will depend both on containing the coronavirus and on government efforts to support the recovery.
Economic activity has picked up in recent weeks after what in some places had been months of shutdowns to slow the spread of the novel coronavirus, Powell said in remarks prepared for a Congressional hearing on Tuesday.
“We have entered an important new phase and have done so sooner than expected,” Powell said. “While this bounceback in economic activity is welcome, it also presents new challenges —notably, the need to keep the virus in check.”
· Fed's Daly says 'far too early' to judge U.S. recovery
It is “far too early” to judge the strength of the recovery in the world’s largest economy as it reopens after extended coronavirus shutdowns, San Francisco Federal Reserve President Mary Daly told reporters on a conference call on Monday.
Infections across the United States are rising and governors in California, Florida and Texas are reinstating some restrictions to stem the tide of new cases.
From here, Daly said, the outlook will depend in large part on whether widespread shutdowns are again imposed or whether current mitigation strategies are enough to keep the virus in check but allow people to be back at their jobs.
· CDC says U.S. has ‘way too much virus’ to control pandemic as cases surge across country
The coronavirus is spreading too rapidly and too broadly for the U.S. to bring it under control, Dr. Anne Schuchat, principal deputy director of the Centers for Disease Control and Prevention, said Monday.
The U.S. has set records for daily new infections in recent days as outbreaks surge mostly across the South and West. The recent spike in new cases has outpaced daily infections in April when the virus rocked Washington state and the northeast, and when public officials thought the outbreak was hitting its peak in the U.S.
“We’re not in the situation of New Zealand or Singapore or Korea where a new case is rapidly identified and all the contacts are traced and people are isolated who are sick and people who are exposed are quarantined and they can keep things under control,” she said in an interview with The Journal of the American Medical Association’s Dr. Howard Bauchner. “We have way too much virus across the country for that right now, so it’s very discouraging.”
· White House opposes $1.5 trillion House infrastructure measure
The White House said Monday it opposes a $1.5 trillion proposal from congressional Democrats to boost U.S. infrastructure over the next decade, criticizing how it would pay for new spending.
· U.S. begins to pare back Hong Kong’s special status
The United States began eliminating Hong Kong’s special status under U.S. law on Monday, halting defense exports and restricting the territory’s access to high technology products as China prepares new Hong Kong security legislation.
The U.S. move comes as the top decision-making body of China’s parliament deliberates a draft national security law for Hong Kong that pro-democracy activists in the city fear will be used to eliminate dissent and tighten Beijing’s control.
“The Chinese Communist Party’s decision to eviscerate Hong Kong’s freedoms has forced the Trump administration to re-evaluate its policies toward the territory,” U.S. Secretary of State Mike Pompeo said.
The Chinese embassy in Washington did not immediately respond to a request for comment.
· ECB could boost bond buying by another trillion euros, economist projects
The European Central Bank (ECB) could expand its bond-buying program by a further 1 trillion euros ($1.12 trillion) over the next two to three years as inflation takes center stage, according to Berenberg European Economist Florian Hense.
The central bank earlier this month increased its Pandemic Emergency Purchase Programme (PEPP) by 600 billion euros to a total of 1.35 trillion euros in a bid to shore up the economy against the fallout from the coronavirus pandemic.
In a note Friday, Hense said that while the market broadly anticipates one more expansion of the PEPP envelope by around 500-600 billion euros, the ECB could deliver a total increase of between 800 billion and 1.6 trillion euros, depending on the inflation outlook, the success of the ECB’s long-term loans, and the currently paused monetary policy strategy review.
· Merkel, Macron hope for EU summit deal on budget, recovery fund
German Chancellor Angela Merkel on Monday held out hope that European Union member states will overcome their differences on a multi-year budget of more than 1 trillion euros ($1.12 trillion) as well as a recovery fund at a summit of leader next month.
They will seek to bridge differences at their summit on July 17-18 over a proposal by the European Commission, the bloc’s executive, to borrow 500 billion euros from the market for a new recovery fund that would help revive economies hardest hit by coronavirus, notably Italy and Spain.
· Local lockdown ordered in English city of Leicester over high Covid-19 infection rate
The English city of Leicester must go back into a stricter lockdown because its Covid-19 infection rate was much higher than anywhere else in the country, health minister Matt Hancock told parliament on Monday.
As the rest of the United Kingdom gears up for an easing of social distancing measures on July 4, Hancock said schools and nonessential shops would have to close in Leicester, and urged people not to travel to, from or within the city.
· UK businesses turn less negative for first time since January: survey
Confidence among British businesses improved in June for the first time since January ahead of the latest relaxation of the country’s coronavirus lockdown, according to a survey published by Lloyds Bank on Tuesday.
Business confidence rose by three percentage points to its highest level since March but remained deeply in negative territory at -30%, the survey showed.
Slightly fewer companies expected to lay off staff - 41% compared with 44% in May - and the proportion planning a pay freeze edged down.
· South Korea finance ministry to monitor financial markets, liquidity flows
South Korea will set up a channel to provide foreign-currency funds to local financial firms through repurchase agreements to prevent any temporary shortage in liquidity from developing into a systemic risk, Vice Finance Minister Kim Yong-beom said on Tuesday.
Authorities also will continue to monitor financial markets and liquidity flows as the economic impact from the coronavirus pandemic persists, he told a meeting, noting other risks including U.S.-China tensions could heighten volatility.
· Oil rises on improving economic data but new coronavirus cases loom
Oil prices rose about $1 a barrel on Monday, after bullish data from Asia and Europe, but investors are wary about sharp spikes in new coronavirus infections around the world.
Brent crude LCOc1 gained 69 cents, or 1.7%, to settle at $41.71 a barrel. U.S. crude CLc1 rose $1.21, or 3.1%, to settle at $39.70 a barrel.
The recovery of economic sentiment in the euro zone intensified in June with improvements across all sectors, European Commission data showed on Monday. Overall sentiment rose to 75.7 points in June from 67.5 in May, though still short of expectations.
In China, profits at industrial firms rose for the first time in six months in May, suggesting the country’s economic recovery is gaining traction.
Reference: CNBC, Reuters
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