· Dollar dented as yields dive on recovery worries
The dollar was under pressure on Wednesday from a towering euro and crumbling U.S. yields, as the latest coronavirus relief package got bogged down in Congress and investors braced for a bumpy ride to economic repair.
A hardening perception that the U.S. rebound is lagging Europe has buttressed the common currency just below a two-year high, helping it repel a bounce in the dollar this week.
The euro last sat at $1.1808, after twice testing support around $1.17, as focus turns to U.S. private jobs data due later in the day and the Washington stalemate.
The Japanese yen rose to 105.66 per dollar and gold soared above $2,000 an ounce as the bond market’s dim view of the U.S. recovery sent real yields further into negative territory and nominal yields close to record lows.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.065 after an earlier high of 93.245.
White House negotiators on Tuesday vowed to work “around the clock” with congressional Democrats to try to reach a deal on coronavirus relief by the end of this week.
But lawmakers have allowed a $600-a-week unemployment benefit to lapse while they remain at loggerheads and the two sides still seem far apart. Treasury Secretary Steven Mnuchin warned that “we’re not going anywhere close” to the $3.4 trillion that Democrats have been seeking.
The yield on inflation-protected 10-year U.S. debt is at a record low of -1.05% and nominal 10-year yields sit near their lowest since the height of the March panic, at 0.5118%.
Investors are already expecting a slowdown in U.S. hiring from private payrolls data due around 1215 GMT. But a disappointment would bode ill for broader payroll data due on Friday and underscore the apparent divergence between Europe and the United States.
· Treasury yields move higher as markets monitor stimulus talks
U.S. government debt prices were lower Wednesday morning as talks over further stimulus checks remain deadlocked.
At around 3:28 a.m. ET, the yield on the benchmark 10-year Treasury note moved higher to trade at 0.5216% The yield on the 30-year Treasury bond also traded higher at 1.2055%. Yields move inversely to prices.
· Global coronavirus deaths exceed 700,000, one person dies every 15 seconds on average
The global death toll from the coronavirus surpassed 700,000 on Wednesday, according to a Reuters tally, with the United States, Brazil, India and Mexico leading the rise in fatalities.
Nearly 5,900 people are dying every 24 hours from COVID-19 on average, according to Reuters calculations based on data from the past two weeks.
That equates to 247 people per hour, or one person every 15 seconds.
· Fed's Daly says length of support needed by economy will have to be longer- Bloomberg
The coronavirus outbreak will be staying for “longer and more vigorously” than initially anticipated, which will lead to the U.S. economy needing more support than initially thought, Federal Reserve Bank of San Francisco President Mary Daly said on Tuesday.
"The length of the support that the economy is going to need, before we can ever stimulate the economy, it just has to be longer," Daly said in an interview reported by Bloomberg News.
Daly also said there is “room to let the economy go well beyond what people think is its maximum level of employment.”
Reporting by Kanishka Singh in Bengaluru; Editing by Sandra Maler
· UK car sales rise 11% in first full month of dealership reopening
British new car registrations rose by roughly 11% year on year in July, according to preliminary industry data for the first full month that showrooms were allowed to reopen across the United Kingdom as lockdown measures eased.
July would be the first increase since December but year-to-date demand is down around 40% and the latest forecast predicts a full-year drop of around 30% in 2020.
In March, demand fell 44%, in April by 97%, in May registrations were down 89% and in June they fell by 35%, according to figures from the Society of Motor Manufacturers and Traders (SMMT).
· Australia suffers record coronavirus deaths, triggering tighter curbs
Australia reported a record 15 deaths from COVID-19 on Wednesday, all in Victoria state, which was preparing to close much of its economy to control a second wave of infection that threatens to spread across the country.
The second-most populous state in Australia reported a record rise of 725 new COVID-19 cases despite having reimposed a lockdown on Melbourne, the state capital with a population of 5 million people, four weeks ago.
New South Wales and Queensland states introduced new measures to limit the spread of the new coronavirus, which has claimed 247 lives across the country.
In Victoria, the state government imposed a night curfew and tightened restrictions on people’s movements across greater Melbourne on Sunday, and ordered most businesses to stop trading from Wednesday night in a massive blow to the national economy.
Victorian Premier Daniel Andrews said on Wednesday further restrictions would include shutting most child-care centres and expanding a ban on elective surgery to the whole state to free up medical resources for coronavirus cases.
· China's July exports seen falling on global virus surge; import growth cools: Reuters poll
China’s exports are expected to have dipped in July as a surge in global coronavirus infections depressed demand, while growth in imports likely cooled, a Reuters poll showed on Wednesday.
Trade weakness will add to concerns whether the ongoing recovery momentum in the world’s second-largest economy can be sustained even as domestic demand continues to improve on the back of government stimulus.
Exports in July are expected to have contracted 0.2% from a year earlier, according to a median estimate of a Reuters poll of 28 economists, compared with an increase of 0.5% in June.
Imports likely rose 1.0% on year, the poll showed, easing from a gain of 2.7% the previous month, due to a high base last year and the reimposition of lockdown measures in some overseas economies which hampered the flow of goods, analysts said.
· Indonesia's economy contracts for the first time since 1999 in second quarter
Indonesia’s economy contracted for the first time in over two decades in the second quarter as efforts to contain the new coronavirus dealt a blow to consumer demand and business activity in Southeast Asia’s largest economy.
Gross domestic product shrank by a bigger than expected 5.32% in the April-June period from a year ago, according to data from Statistics Indonesia, the first contraction since 1999.
The economy had been expected to shrink 4.61%, according to a Reuters poll of economists, after growing by 2.97% year-on-year in the first quarter.
The data showed a broad-based impact from the fallout of the pandemic, with households curbing spending and businesses delaying investments, while exports were also hit by lower global demand and commodity prices.
· OIL PRICES RISE AS U.S. CRUDE INVENTORIES SHOW LARGE DROP
Oil prices rose on Wednesday after inventory data showed a big drop in U.S. crude stocks although gains were capped by concerns over fuel demand with mounting global COVID-19 cases.
Brent crude was up by 31 cents, or 0.7%, at $44.74 a barrel by 0713 GMT. The contract rose 0.6% on Wednesday to its highest close since March 6.
West Texas Intermediate oil was up by 26 cents, or 0.6%, at $41.96 a barrel. The contract ended Tuesday trading 1.7% higher, its highest close since late July.
Crude inventories fell 8.6 million barrels in the week to Aug. 1 to 520 million barrels, compared with analysts’ expectations for a drop of 3 million barrels, according to data from the American Petroleum Institute, an industry organization.
Official figures from the U.S. Energy Information Administration are due out later on Wednesday.
Reference: CNBC, Reuters, Kitco
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