· Safe-haven currencies soften as signs of recovery fan risk appetite
Safe-haven currencies were on the backfoot on Tuesday as hopes of an economic turnaround boosted riskier assets like the Aussie and yuan, although worries about a blowout in British public spending kept the pound under pressure.
Spurring fresh optimism on the U.S. economy was pending home sales data, which showed that housing market activity had quickly recovered in May from a plunge triggered by the pandemic.
The dollar has climbed 0.1% to 107.70 yen JPY=, having touched a three-week high of 107.885 in the previous session, though it was capped by its 100-day moving average around that level.
The euro stood at $1.1244 EUR=, having gained a tad against the U.S. currency on Monday.
End-of-quarter corporate repatriation flows appear to be playing a role in latest moves, analysts also said.
Sterling traded at $1.2297 GBP=D4, after sliding to a one-month low of $1.2252 on Monday on concerns about how Britain's government will pay for its planned infrastructure program following Prime Minister Boris Johnson's promise to increase spending.
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.
All in all, the dollar index =USD was little changed at 97.444. U.S. Federal Reserve Chair Jerome Powell said late on Monday 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.
· USD/JPY attempting another run towards 108.00 amid risk-on mood
The USD/JPY pair retreated from the mentioned high, now trading around 107.65. It maintains a short-term positive stance, as it settled above the 38.2% retracement of its latest daily slide at 107.50, the immediate support. In the 4-hour chart, the pair is developing below all of its moving averages, with the 20 SMA accelerating higher but below the larger ones. Technical indicators have lost their bullish strength, retreating just modestly from their daily highs. The 50% retracement of the mentioned decline comes at 107.95, the immediate resistance.
Resistance levels: 107.95 108.30 108.65
Support levels: 107.50 107.10 106.70
· Powell, Mnuchin enter the lion's den again to discuss pandemic response
U.S. lawmakers on Tuesday will get another chance to grill the heads of the Federal Reserve and Treasury over the effectiveness of the nearly $3 trillion in emergency aid doled out to stem the economic fallout from the novel coronavirus pandemic.
The U.S. central bank, with Treasury’s backing, has launched programs to improve the flow of credit as economic activity cratered and millions of jobs were lost, including its new Main Street Lending Program for mostly medium-sized businesses.
Treasury has been at the forefront of the $660 billion forgivable-loan Paycheck Protection Program (PPP) aimed at keeping small businesses afloat and their employees on payrolls.
Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin are due to testify before the U.S. House of Representatives Financial Services Committee at 12:30 p.m. EDT (1630 GMT) to discuss how funds were disbursed to households and businesses.
Powell and Mnuchin testified about the coronavirus economic response before the Senate Banking Committee last month.
· California, Texas see record COVID-19 surges, Arizona clamps down
California and Texas both marked record spikes in new COVID-19 infections on Monday, a Reuters tally showed, as Los Angeles reported an “alarming” one-day surge in America’s second-largest city that put it over 100,000 cases.
Los Angeles has become a new epicenter in the pandemic as coronavirus cases and hospitalizations surge there despite California Governor Gavin Newsom’s strict orders requiring bars to close and residents to wear masks in nearly all public spaces.
Los Angeles County said its beaches will be closed for the Independence Day weekend and fireworks displays will be banned.
The New York Times reported on Monday that 43% of U.S. deaths from COVID-19 were linked to nursing homes and long-term care facilities. The paper cited its own tracking database.
· Los Angeles delays movie theater reopenings after rise in coronavirus cases
Los Angeles Mayor Eric Garcetti on Monday announced he was taking a “hard pause” on when movie theaters in the city can reopen, citing an increase in coronavirus cases.
Los Angeles County is the biggest movie theater market in the United States.
· India's first COVID-19 vaccine candidate approved for human trials
Bharat Biotech’s COVID-19 vaccine has been approved for human trials, making it India’s first domestic candidate to get the green light from the government’s drug regulator as cases surge in a country with more than1.3 billion people.
The Drug Controller General of India has approved the company’s application to conduct a Phase I and II clinical trial of Covaxin, which was developed along with the Indian Council of Medical Research’s National Institute of Virology, the company said in a statement on Monday.
Human clinical trials are scheduled to start across the country in July for the vaccine, which was developed and manufactured in Bharat Biotech’s facility at Genome Valley in Hyderabad, India.
India, which lags only the United States, Brazil and Russia in total cases, reported close to 20,000 new infections on Monday, according to data from the country’s federal Health Ministry.
· South Australia state cancels border reopening after virus spike
South Australia, one of several states in the country to close domestic borders, on Tuesday cancelled its scheduled reopening to some parts of the nation, citing a spike in coronavirus infections in neighbouring Victoria.
The country’s fifth most-populous state had said it would remove restrictions on interstate arrivals on July 20 as part of a broader nationwide relaxation of curbs to contain the new coronavirus.
However, Victoria has reported a double-digit increase in new cases for each of the past 13 days, resulting in Australia’s biggest daily increase in new cases since April.
· Germany's confirmed coronavirus cases rise by 498 to 194,259: RKI
The number of confirmed coronavirus cases in Germany increased by 498 to 194,259, data from the Robert Koch Institute (RKI) for infectious diseases showed on Tuesday.
The death toll rose by 12 to 8,973, the tally showed.
· Japan says coronavirus border controls in place, adding 18 countries to entry ban
The Japanese government said existing border restrictions would remain in place except in cases involving humanitarian reasons.
The country said it would add 18 countries to its entry ban from July 1, according to a June 29 posting on the foreign ministry website.
That brings the total number of countries subject to Japan’s entry ban to 129.
· China reports 19 new COVID-19 cases, including seven in Beijing
China on Tuesday reported 19 new coronavirus cases in the mainland for June 29, up from 12 a day earlier, the health authority said. There were no new deaths.
Of the new infections, seven were in Beijing, the National Health Commission said in a statement.
· Chinese researchers warn of new virus in pigs with human pandemic risk
A new flu virus found in Chinese pigs has become more infectious to humans and needs to be watched closely in case it becomes a potential “pandemic virus”, a study said, although experts said there is no imminent threat.
A team of Chinese researchers looked at influenza viruses found in pigs from 2011 to 2018 and found a “G4” strain of H1N1 that has “all the essential hallmarks of a candidate pandemic virus”, according to the paper, published by the U.S. journal, Proceedings of the National Academy of Sciences (PNAS).
Pig farm workers also showed elevated levels of the virus in their blood, the authors said, adding that “close monitoring in human populations, especially the workers in the swine industry, should be urgently implemented.”
· China's factory activity quickens, but pandemic drags on exporters and recovery
China’s factory activity expanded at a stronger pace in June after the government lifted lockdowns and stepped up investment, but persistent weakness in export orders suggests the coronavirus crisis will remain a drag on the economy for some time.
The official manufacturing Purchasing Manager’s Index (PMI) came in at 50.9 in June, compared with May’s 50.6, National Bureau of Statistics (NBS) data showed on Tuesday, and was above the 50.4 forecast in a Reuters poll of analysts.
The 50-point mark separates expansion from contraction on a monthly basis.
The uptick was underpinned by the quickening pace of expansion in production. The forward-looking total new orders gauge also brightened, rising to 51.4 from May’s 50.9, suggesting domestic demand is picking up as industries from non-ferrous metals to general equipment and electrical machinery all showed an improvement.
But export orders continued to contract, albeit at a slower pace, with a sub-index standing at 42.6 compared to 35.3 in May, well below the 50-point mark.
· Japan factory output slumps as economy sinks deeper in recession
Japan’s industrial output fell for a fourth straight month in May to the lowest level since the global financial crisis and the jobless rate hit a three-year high, underscoring the broad economic pain caused by the coronavirus.
The world’s third-largest economy is bracing for its worst postwar recession, hurt by coronavirus lockdown measures at home and overseas that have upended supply chains, kept businesses shut and depressed consumer spending.
Ministry of Economy, Trade and Industry (METI) data out on Tuesday showed that factory output fell 8.4% month-on-month in May to 79.1, a level not seen since March 2009 when the financial crisis sapped global demand.
· Japan's jobless rate rises to 2.9% in May: government
Japan’s jobless rate rose and the availability of jobs fell in May, government data showed on Tuesday.
The seasonally adjusted unemployment rate was 2.9% in May, up from 2.6% in April, figures from the Ministry of Internal Affairs and Communications showed. The median forecast was 2.8%.
The jobs-to-applicants ratio fell to 1.20 in May from 1.32 in April, marking the lowest reading since July 2015, labour ministry data showed.
· Japan calls China's reported move on Hong Kong 'regrettable'
Japan’s top government spokesman said on Tuesday China’s move to pass national security legislation for Hong Kong, if confirmed, was “regrettable” and undermined credibility in the ‘one country, two systems’ formula of governance.
“We will continue to work with the countries involved to deal with this issue appropriately,” Chief Cabinet Secretary Yoshihide Suga told a news conference when asked about reports that China’s parliament had passed the law on Tuesday.
He added that Japan would continue to communicate closely with the United States and China, saying stable relations between the two global powers were vital for regional and global security.
· World Bank sees Thai economy shrinking by at least 5% this year
Thailand’s economy is expected to be severely impacted by the COVID-19 pandemic, shrinking by at least 5% this year and taking more than two years to return to pre-pandemic GDP output levels, the World Bank said on Tuesday.
In the baseline scenario, the economy is projected to grow by 4.1% in 2021 and by 3.6% in 2022, the agency said in a statement.
An estimated 8.3 million workers will lose employment or income because of the COVID-19 crisis, which has put many jobs at risk, particularly those related to tourism and services, the World Bank said.
· Australia central bank urges ongoing government stimulus for economy
Australia’s economy will need “considerable” support for some time, Reserve Bank of Australia Deputy Governor Guy Debelle said on Tuesday, adding it would be a “problem” if the government ended fiscal stimulus in September as initially flagged.
· Oil prices slip on demand worries, prospect of Libyan supply return
Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya’s state oil company flagging progress on talks to resume exports.
U.S. West Texas Intermediate (WTI) crude futures fell as much as 44 cents, but recovered slightly after stronger-than-expected Chinese factory data.
By 0201 GMT they were trading down 26 cents, or 0.7%, at $39.44 a barrel, having jumped 3% on Monday.
Brent crude futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday’s 92-cent gain. The less active August contract, which expires on Tuesday, fell 25 cents after gaining 69 cents on Monday.
Optimism on Monday had been based on strong growth in U.S. pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns.
But at the same time, coronavirus cases continue to rise in southern and southwestern U.S. states.
Reference: CNBC, Reuters, Worldometers
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