· Dollar loses ground amid doubts about U.S. stimulus
The dollar fell against most of its peers on Thursday amid fading hopes for a compromise between Republicans and Democrats over additional stimulus for the U.S. economy.
The Australian dollar rose after better-than-expected jobs data eased concerns about a persistent coronavirus outbreak in the country’s second-largest city.
The greenback was hampered by a decline in Treasury yields, but analysts say this is likely only a temporary setback because U.S. lawmakers will eventually agree to more stimulus to help the economy recover from the coronavirus.
Against the euro, the dollar fell to $1.1804, adding to a 0.4% decline on Wednesday.
The British pound rose 0.15% to $1.3053.
The dollar edged lower against the safe harbour Swiss franc to 0.9118.
The dollar pulled back from a three-week high to trade at 106.78 yen.
The onshore yuan briefly rose to a five-month high before steadying at 6.9421 per dollar as nerves set it before U.S. and Chinese officials meet Saturday to review their Phase I trade deal.
President Donald Trump accused congressional Democrats on Wednesday of not wanting to negotiate over a U.S. coronavirus aid package as top Republican and Democratic negotiators traded blame for a five-day lapse in talks over relief legislation.
The U.S. dollar index against a basket of major currencies was little changed on Thursday but was still well above the two-year low it reached last week.
· Over 1 million more Americans are expected to file unemployment claims amid lingering economic uncertainty
The number of Americans filing new unemployment claims may continue to seesaw, creeping up, then slightly falling, but the level will likely remain high as economic uncertainty lingers amid surges in coronavirus cases.
About 1.25 million Americans filed initial applications for unemployment insurance last week, economists estimate.
That would be a slight increase over the previous week and comes as out-of-work Americans make do without the extra $600 federal weekly benefit that began during the pandemic but ended in July.
· U.S. economy does not need a lot more stimulus: White House adviser
The U.S. economy appears to be entering a self-sustaining recovery and does not need a big dose of stimulus from another coronavirus relief bill, a top White House economic adviser said on Wednesday.
“The numbers are coming in very, very nicely,” National Economic Council Director Larry Kudlow told Fox Business Network, adding that data suggested a jump in COVID-19 cases over the summer put only “a slight restraint on the economy.”
· U.S.-China trade deal in 'fine' shape, White House's Kudlow says
China is continuing to buy U.S. goods, particularly commodities, under its Phase 1 trade deal with the United States, despite rising tensions over Hong Kong and other issues, top White House economic adviser Larry Kudlow said on Tuesday.
Asked if deteriorating ties between the world’s two largest economies on other fronts could result in the trade deal being thrown out the window, Kudlow said, “No, no.”
“The one area we are engaging is trade,” he told reporters at the White House. “It’s fine right now.”
· Despite agreement, China purchase of US agricultural goods lags
Seven months after the United States and China signed a preliminary agreement to temper their trade war, Beijing's purchases of US agricultural goods have yet to reach the deal's target.
As President Donald Trump readies for a tough reelection battle in November, US media reported the two sides are set to meet beginning August 15 to discuss the deal, which calls for China to sharply increase buying American goods and services this year and next.
But according to data compiled by the Peterson Institute for International Economics (PIIE), Chinese agricultural purchases at the end of June were far from where they should be at this point in the year.
They had reached only 39 percent of their semi-annual target, according to US figures, or 48 percent, based on Chinese figures.
"If we get back to what the level of trade was in 2017, we'll be lucky," said Chad Bown, a PIIE senior fellow who authored the study, referring to the year before the trade war began.
Under the deal's terms, China agreed to increase agricultural imports $32 billion over the next two years from 2017 levels.
· In China, fears of financial Iron Curtain as U.S. tensions rise
A sharp escalation in tensions with the United States has stoked fears in China of a deepening financial war that could result in it being shut out of the global dollar system - a devastating prospect once considered far-fetched but now not impossible.
Chinese officials and economists have in recent months been unusually public in discussing worst-case scenarios under which China is blocked from dollar settlements, or Washington freezes or confiscates a portion of China’s huge U.S. debt holdings.
Those concerns have galvanised some in Beijing to revive calls to bolster the yuan’s global clout as it looks to decrease reliance on the greenback.
Some economists even float the idea of settling exports of China-made COVID-19 vaccines in yuan, and are looking to bypass dollar settlement with a digital version of the currency.
· EUR/USD rises above 1.18 as dollar drops with yields
EUR/USD is trading above 1.18, as the dollar declines alongside yields, following a large US debt issuance. Weekly jobless claims and the ongoing fiscal impasse in Washington are eyed.
From a technical perspective, any subsequent positive move is likely to confront some resistance near the 1.1840 level. Some follow-through buying has the potential to lift the pair back to the double-top resistance, around the 1.1900-1.1910 region. A convincing breakthrough will be seen as a fresh trigger for bullish traders and set the stage for a move towards reclaiming the key 1.2000 psychological mark with some intermediate resistance near the 1.1975-80 region.
On the flip side, immediate support is pegged near the 1.1740-35 region. This is followed by the 1.1700 mark, which marks the neckline support of the double-top pattern. Sustained weakness below will confirm a near-term bearish breakdown and accelerate the fall towards the 1.1625-20 support area.
Subsequent fall below the 1.1600 mark will set the stage for an extension of the corrective slide towards testing the next major support near the 1.1550-40 region, marking the 50% Fibonacci level of the 1.1168-1.1916 rally.
· Germany: Optimistic we'll have a vaccine in coming months and certainly next year
German Health Minister Jens Spahn on Thursday told ZDF television that he expected there would be a COVID-19 vaccine in the coming months and definitely next year.
“I’m optimistic that in the next months, and certainly in the next year, there can be a vaccine,” Spahn said.
He declined to give a specific month and said it was not yet possible to say how often people would need to be vaccinated or how long-lasting the immunity it conferred would be.
· China military says recent drills near Taiwan were 'necessary' to safeguard sovereignty
China’s military recently held drills directed at Taiwan, a People’s Liberation Army spokesman said on Thursday, after a high level visit by the United States to Taiwan.
The drills were a ‘necessary action’ to safeguard sovereignty, Senior Colonel Zhang Chunhui, spokesman for the Eastern Theater Command of the People’s Liberation Army (PLA)said in a statement.
The statement said the drills were held in the southern and northern ends of the Taiwan strait.
China sees Taiwan as part of its territory and has not ruled out the use of force to bring the island under its control.
· North Korea nuclear reactor site threatened by recent flooding, U.S. think-tank says
Satellite imagery suggests recent flooding in North Korea may have damaged pump houses connected to the country’s main nuclear facility, a U.S.-based think-tank said on Thursday.
Analysts at 38 North, a website that monitors North Korea, said commercial satellite imagery from August 6-11 showed how vulnerable the Yongbyon Nuclear Scientific Research Center’s nuclear reactor cooling systems are to extreme weather events.
South Korea’s Ministry of Defence declined to comment on the 38 North report, but said it is always monitoring developments related to North Korea’s nuclear and missile programmes and maintaining close cooperation with the U.S. government.
· Oil drops after OPEC predicts weaker demand but U.S. inventory data limits decline
Crude oil prices fell on Thursday after OPEC said it expected demand to drop more than expected, although data showing a decline in U.S. inventories lent support.
Brent crude LCOc1 was down 26 cents or 0.6% at $45.17 a barrel by 0647 GMT, after a gain of around 2% in the previous session. West Texas Intermediate CLc1 oil also lost 0.6%, a 25 cent decline to $42.42 a barrel which followed a climb of 2.6% on Wednesday.
The Organization of the Petroleum Exporting Countries said in a monthly report that world oil demand will fall by 9.06 million barrels per day this year, more than the 8.95 million bpd decline expected a month ago.
Reference: CNBC, Reuters, AFP, Kitco, FXStreet
Thai
Eng