· Dollar edges higher as Fed outlook lifts U.S. yields
The dollar firmed against major currencies on Thursday following the U.S. Federal Reserve’s upbeat assessment of the economic recovery and as its increased tolerance for higher inflation pushed Treasury yields higher.
Against six major currencies, the dollar index rose about 0.32% to trade at 93.493 and changed hands at 1.1763 against the euro, which briefly hit a one-month low.
Market participants will focus on BOJ Governor Haruhiko Kuroda’s remarks about how the central bank would coordinate monetary policy with the new Suga administration.
The safe-haven Japanese yen changed hands at 105.08 against the greenback, a fraction below a 2-1/2-month high of 104.81 marked overnight.
Elsewhere, the Chinese yuan traded at 6.775 per dollar in offshore trade.
The focus for the British pound is now on Brexit tensions, following the government’s deal on Wednesday to avert a rebellion in Prime Minister Boris Johnson’s own party, giving parliament a say over the use of post-Brexit powers.
The pound was last at $1.2932, after dropping more than 3.5% against the greenback and the euro last week.
· Treasury yields retreat as caution over recovery remains despite Fed support
U.S. government debt prices were higher Thursday morning, as investors remained hesitant despite the Federal Reserve’s pledge not to hike interest rates until 2023.
At around 1:50 a.m. ET, the yield on the benchmark 10-year Treasury note was down at 0.6773% and the yield on the 30-year Treasury bond fell to 1.4343%. Yields move inversely to prices.
· Biden warns UK on Brexit: No trade deal unless you respect Northern Irish peace deal
U.S. Democratic presidential candidate Joe Biden warned the United Kingdom that it must honour the Northern Irish peace deal as it extracts itself from the European Union or there would be no U.S. trade deal.
“We can’t allow the Good Friday Agreement that brought peace to Northern Ireland to become a casualty of Brexit,” Biden said in a tweet.
“Any trade deal between the U.S. and U.K. must be contingent upon respect for the Agreement and preventing the return of a hard border. Period.”
Johnson unveiled legislation that would break parts of the Brexit divorce treaty relating to Northern Ireland, blaming the EU for putting a revolver on the table in trade talks and trying to divide up the United Kingdom.
· Goldman Sachs sees the Chinese yuan strengthening to 6.5 per dollar over the next 12 months
Goldman Sachs expects the onshore Chinese yuan to strengthen to 6.5 per dollar over the next 12 months, according to Timothy Moe, co-head of Asia macro research and chief Asia-Pacific equity strategist at Goldman Sachs.
“We’ve recently firmed up … in particular, our Chinese renminbi forecast from 6.7 to 6.5 on a 12 month view,” Moe told CNBC’s “Squawk Box Asia” on Thursday, adding that it was one of the firm’s “strongest views” for Asian currencies.
· BOJ holds fire, offers brighter view of economy as pandemic impact eases
The Bank of Japan kept monetary policy steady on Thursday and offered a slightly more upbeat view of the economy than in July, suggesting that no immediate expansion of stimulus was needed to combat the coronavirus pandemic.
But the central bank warned of various risks to the outlook and repeated its readiness to ramp up monetary support “without hesitation” should the pandemic’s woes derail Japan’s recovery.
· World Bank's IFC warns of Asia-Pacific 'financial crisis'
The Asia-Pacific region risks a damaging financial crisis from a surge of non-performing loans caused by rising insolvencies, a senior official from the World Bank Group’s private sector arm said on Thursday.
In an interview with Reuters, Alfonso Garcia Mora, Vice President for Asia and the Pacific of the International Finance Corp (IFC), said bankruptcies were expected to rise by 30% because of the economic crisis caused by the new coronavirus pandemic.
While many firms have been given moratoriums on their loan repayments, many central banks are not requiring financial institutions to regularly monitor these firms’ solvency. This, said Garcia Mora, was “very dangerous”.
· OPEC+ panel to meet amid oil price decline
OPEC and allies, led by Russia, are scheduled to hold an online meet on Thursday to discuss compliance with their agreed output cuts and demand trends amid falling oil prices and a faltering economic recovery outlook.
A panel of key producers including Saudi Arabia and Russia from the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, is expected to keep their current output reduction target of 7.7 million barrels per day (bpd), or around 8% of global demand.
They will also likely press laggards such as Iraq, Nigeria and the United Arab Emirates to cut more barrels to compensate for overproduction.
The meeting, known as the Joint Ministerial Monitoring Committee (JMMC), is expected to start at 1200 GMT, OPEC+ sources said.
· Oil falls as demand worries re-emerge, crews return to U.S. Gulf rigs
Oil prices fell on Thursday, after rising steeply in the two previous sessions, as concerns about weak fuel demand re-emerged and producers in the Gulf of Mexico prepared to resume output following Hurricane Sally.
Brent crude LCOc1 futures fell 67 cents, or 1.6%, to $41.55 a barrel at 0628 GMT, after climbing 4.2% on Wednesday.
U.S. West Texas Intermediate (WTI) crude CLc1 futures were down 70 cents, or 1.7%, to $39.46 a barrel, after jumping 4.9% on Wednesday.
Reference: CNBC, Reuters
Thai
Eng