· Dollar nurses losses ahead of non-farm payrolls data
The dollar nursed losses against major currencies on Friday ahead of the U.S. non-farm payrolls report, which some investors fear could reinforce the view that economic momentum is slowing.
Sentiment has turned against the greenback due to a combination of rising U.S. coronavirus infections, a steady decline in Treasury yields, and a lack of consensus in Washington over additional fiscal stimulus.
Analysts say the dollar will continue to fall, particularly against the euro, the yen and Swiss franc, as expectations for a V-shaped recovery from the coronavirus epidemic fade and investors take a more sanguine view of markets.
Against the euro, the dollar stood at $1.1874 on Friday, close to its weakest in more than two years
The British pound bought $1.3140, close to its strongest level since March.
Against the yen, which is also considered a safe currency, the dollar traded at 105.60, not far from a four-month low.
Non-farm payrolls due later on Friday are widely expected to show U.S. jobs creation slowed in July from the previous month, indicating a resurgence in coronavirus infections is undermining the world’s largest economy.
Earlier this week, the five-year Treasury yield hit an all-time low, and the benchmark 10-year yield fell to its second-lowest ever, which has become another reason to shun the greenback.
The dollar index against a basket of major currencies last stood at 92.816, close to a two-year low.
U.S. Republicans and Democrats have so far failed to reach an agreement on the cost of fiscal stimulus measures that many investors say is necessary to prevent the economy form losing more momentum.
· Treasury yields fall ahead of key jobs report; stimulus talks continue
U.S. government debt prices were higher Friday morning as investors awaited July’s federal jobs report, while lawmakers continued to haggle over a fresh coronavirus relief bill.
At around 2 a.m. ET, the yield on the benchmark 10-year Treasury note was down at 0.5198% and the yield on the 30-year Treasury bond fell to 1.1776%. Yields move inversely to prices.
· Trump preps bans on WeChat, TikTok, stoking tension with Beijing
U.S. President Donald Trump has unveiled sweeping bans on U.S. transactions with the Chinese owners of messaging app WeChat and video-sharing app TikTok, escalating a high-stakes confrontation with Beijing over the future of the global tech industry.
The executive orders announced Thursday and effective in 45 days come after the Trump administration this week flagged increased effort to purge “untrusted” Chinese apps from U.S. digital networks, calling Tencent Holdings Ltd’s (0700.HK) WeChat and Bytedance’s popular TikTok “significant threats.”
· China demand fuels German export, production rebound
Overall export demand, especially from China, helped Germany’s manufacturers recover from the shock of the coronavirus lockdown for the second month running in June, though output was still well below the level of a year ago.
Industrial output from Europe’s largest economy grew 8.9% on the month, fueled in part by a 14.9% increase in exports - the largest month-on-month increase in almost 30 years.
Germany’s automotive industry recorded a 54.7% increase in output over the previous month, though volumes were still 20% lower than in February, the last month before the pandemic struck.
· China July exports rise at fastest pace in seven months, but imports fall
China’s exports rose at the fastest pace in seven months in July, while imports declined, painting a mixed picture for the economy as it recovers from its pandemic-induced slump.
Exports in July increased 7.2% from a year earlier, the fastest pace since December last year, customs data showed on Friday, confounding analysts’ expectations for a 0.2% drop and quickening from a 0.5% increase in June.
Imports, on the other hand, swung back into contraction, missing market expectations for a 1.0% increase. They had bucked the trend in the previous month.
The country’s trade surplus for July stood at $62.33 billion, compared with an expected $42 billion surplus forecast in the poll and a surplus of $46.42 billion in June.
· Japan's second quarter GDP likely shrank most on record due to coronavirus crisis: Reuters poll
Japan’s economy likely contracted at the sharpest pace on record in the second quarter as the coronavirus crisis crushed business and consumer spending, a Reuters’ poll showed, and a recent surge in infections is clouding the outlook for recovery.
Gross domestic product (GDP) is expected to have shrunk by an annualised 27.2% in April-June, the third straight quarterly contraction and the biggest decline on record since comparable data became available in 1980, the poll of 18 economists found.
· Japan household spending down 1.2% on year in June
Japan's household spending fell 1.2 percent in June from a year earlier, down for the ninth straight month, but showed signs of recovery from record falls logged due to the coronavirus pandemic, government data showed Friday.
The decline was significantly reduced compared to a 16.2 percent plunge in May, the steepest decrease since comparable data became available in January 2001, and an 11.1 percent fall in April which was also a record at the time, according to the Ministry of Internal Affairs and Communications.
· Oil prices slip on uncertainty over fuel demand, U.S. stimulus
Oil prices dipped on Friday, adding to losses from the previous session, on worries that fuel demand recovery will slow amid a resurgence of coronavirus cases and as talks have stalled in the United States on a new stimulus deal.
U.S. West Texas Intermediate (WTI) crude CLc1 futures slipped 17 cents, or 0.41%, to $41.78 a barrel by 0651 GMT, while Brent crude LCOc1 fell 17 cents, or 0.38%, to $44.92. Both contracts had traded higher earlier in the day.
However, the two contracts are set for weekly gains of around 4%, the most for the two benchmarks since the week ending on July 3.
The resurgence of coronavirus infections remains the key issue for the oil markets, as that will determine how fast fuel demand rebounds, analysts said. Tallies show infections in the United States are rising in a number of states, including Colorado, Ohio and Virginia.
The weakness in physical crude and sluggish refinery margins across most regions also weighed on prices.
Reference: CNBC, Reuters
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