· Dollar holds its ground as investors await U.S. stimulus talks
The dollar held overnight gains on Tuesday following seven weeks of an almost relentless fall as investors clung to hopes of a bipartisan stimulus deal in Washington and U.S. bond yields rebounded from multi-month lows.
The dollar index jumped back to 93.568 USD= from Friday's two-year low of 92.495. Having fallen for seven straight weeks, the currency was due for a short-term corrective bounce, traders said.
The euro changed hands at $1.1745 EUR= up slightly on the day, having eased 0.5% in previous trade. The dollar stood little changed at 106.07 yen JPY=.
U.S. congressional leaders and Trump administration officials said on Monday they were ready to resume negotiations on a coronavirus aid deal, although it was unclear whether Democrats and Republicans would be able to bridge their differences.
Investors are also keeping an eye on the rapidly deteriorating relationship between Washington and Beijing.
China imposed sanctions on 11 U.S. citizens, including Republican lawmakers, following Washington’s sanctions on Hong Kong and Chinese officials.
U.S. Treasury Secretary Steven Mnuchin said companies from China and other countries that do not comply with
accounting standards will be delisted from U.S. stock exchanges as of the end of 2021.
While the market has shown limited response to the latest salvos, analysts say the confrontations have longer term implications.
· BoE to step up QE if economy slows again, deputy
The Bank of England will step up on quantitative easing (QE) if the British economy slows and struggles again, Deputy Governor Dave Ramsden said in an interview published on Tuesday, adding to his previous comments that BoE has more headroom to act.
“I’m confident we’ve still got significant headroom to do more QE if we saw a much weaker recovery,” Ramsen said, adding that the central bank was prepared to do more quantitative easing, beyond the 745 billion pounds ($975.58 billion) committed.
He added that he was “confident” there would be no further quarters of negative growth for UK’s economy.
· China auto sales surge in July, log fourth straight month of gains
China’s auto sales in July climbed 16.4% from a year earlier, the fourth consecutive month of gains as the world’s biggest vehicle market comes off lows hit during the country’s coronavirus lockdown.
Sales rose to 2.11 million vehicles in July but are still down 12.7% for the year to date at 12.37 million vehicles, according to wholesale sales data from the China Association of Automobile Manufacturers (CAAM).
The association expects auto sales to fall around 10% this year barring a second wave of virus infections which could deepen the slide to around 20%.
· China imposes sanctions on US senators over Hong Kong
China has said it will impose sanctions on 11 US citizens including senators and other high profile officials.
The sanctions come in response to a decision by the US to sanction 11 Chinese officials and allies in Hong Kong for curtailing political freedoms.
Among those targeted by China were Republican Senators Ted Cruz and Marco Rubio, and Kenneth Roth, the executive director of charity Human Rights Watch.
China did not target any officials from the Trump administration.
· OECD sees South Korea growth to outperform all others this year
South Korea will take the smallest hit to growth of any advanced economy this year after it was able to limit the spread of the coronavirus without imposing severe lockdowns, the OECD said on Tuesday.
South Korea’s gross domestic product will fall just 0.8% in 2020, a slight improvement from the 1.2% downturn in GDP forecast in June, the Organization for Economic Co-operation and Development (OECD) said in a report on Asia’s fourth biggest economy.
That is considerably milder than the OECD average of a 7.5% contraction for this year, and far outperforms the 7.3% and 6.0% shrinkage seen for major economies the United States and Japan, respectively.
· India inflation likely edged up in July on higher food prices - Reuters poll
India’s retail inflation edged up slightly in July due to higher food prices, remaining firmly above the RBI’s medium-term target of 4% for a 10th straight month, a Reuters poll showed.
The August 6-10 Reuters poll of over 45 economists showed Indian retail inflation rose to 6.15% last month from 6.09% in June
· Singapore warns of slow recovery as virus slams Asia's exporters
SINGAPORE (Reuters) - Singapore’s record recession was deeper than first thought in the second quarter, data showed on Tuesday, signalling a lengthy path to recovery as the coronavirus pandemic dealt a major blow to Asia’s trade-reliant economies.
The city-state has been hit hard by COVID-19 with the country under a lockdown for most of the second quarter to curb the spread of the virus.
The government said it now expects full-year GDP to contract between 5% and 7% versus its previous forecast for a 4% to 7% decline. The transport and tourism hub is facing the biggest downturn in its history, expected to wipe out years of previous economic expansion.
Gross domestic product (GDP) fell a record 13.2% year-on-year in the second quarter, revised government data showed, versus the 12.6% drop seen in advance estimates.
· Oil edges higher on hopes for U.S. stimulus, demand recovery
Crude oil gained more ground on Tuesday, with prices underpinned by expectations of U.S. stimulus and a rebound in Asian demand as economies reopen.
Brent crude added 22 cents, or 0.5%, to $45.21 a barrel, as of 0441 GMT. West Texas Intermediate U.S. crude rose 32 cents, or 0.8%, to $42.26 a barrel.
Reference: CNBC, Reuters, BBC
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