· Buoyant dollar holds near six-week high as stock selloff subsides
A resurgent dollar held on to sharp gains on Tuesday after virus fears and worries over delays in fresh U.S. stimulus drove a wave of selling in just about every other asset market.
A public holiday in Japan kept moves in the Asia session modest and calmer trade in equity markets also took some of the pressure off riskier currencies.
Investors are looking to the London open for their next cues. U.S. Federal Reserve Chair Jerome Powell’s appearance with Treasury Secretary Steven Mnuchin at a congressional committee from 1430 GMT is also on the radar.
Against a basket of six major currencies the dollar held at 93.519, just below a six-week high hit on Monday.
The Japanese yen, which fell from a six-month peak as greenback gains gathered pace, edged up to 104.57 per dollar.
Investors are worried that rising Covid-19 cases in Europe and ebbing enthusiasm for fiscal stimulus in the United States, as election campaigning dominates politics, could dent the global recovery from the pandemic.
The euro was held below $1.18 in Asia at $1.1768, while sterling was fragile at $1.2822 amid talk of fresh restrictions in Britain as virus cases grow.
The Telegraph newspaper reported Prime Minister Boris Johnson will encourage Britons on Tuesday to go back to working from home.
Investor positioning still has dollar shorts near record levels. Tentative gains in the Chinese yuan, which advanced 0.1% to 6.7880 per dollar, suggests at least some pressure could soon return to the greenback in Asia.
Also on Monday, U.S. President Donald Trump told thousands of supporters at a political rally that he was rebuffed by officials when he asked about adjusting the dollar’s value.
“There was a flight to safety into the greenback and bonds from the sell off in equities,” strategists Philip Wee and Duncan Tan at Singapore’s DBS Bank said in a note.
“Sentiment will remain weak if (Powell and Mnuchin) fail to break the congressional deadlock to another round of fiscal stimulus.”
· Fed chief Powell slated for first of week's three congressional appearances
U.S. Federal Reserve Chair Jerome Powell on Tuesday makes the first of three appearances on Capitol Hill this week to address lawmakers’ questions and concerns about the raft of emergency measures the central bank has taken to blunt the hit to the economy delivered by the coronavirus pandemic.
Powell - who will be joined by Treasury Secretary Steven Mnuchin on Tuesday and again Thursday - is likely to get an earful from lawmakers concerned that there has been limited uptake so far on some of the programs designed to help small businesses and that other Fed actions have ignited a stock market rally that has exacerbated economic inequality.
Tuesday’s hearing - six weeks before a presidential election for which the pandemic and the government’s response to it is a central issue - is before the House Financial Services Committee chaired by Democrat Maxine Waters of California.
Powell on Wednesday faces the House Select Subcommittee on the Coronavirus Crisis chaired by Democrat Jim Clyburn of South Carolina, and finally the Senate Banking Committee chaired by Republican Mike Crapo of Idaho on Thursday, when he will be joined again by Mnuchin.
· COVID-19 vaccine verdicts loom as next big market risk
Optimism that vaccines are on the way to end the coronavirus pandemic has been a major factor in this year’s U.S. stock resurgence. That will face a critical test in coming weeks, as investors await clinical data on whether they actually work.
A UBS analysis found that about 40% of the market’s gains since May can be pegged to hopes for vaccines to protect against COVID-19, which has killed over 960,000 worldwide and rocked the global economy
Global efforts to develop a vaccine are coming to a head, with late-stage data on trials by companies such as Pfizer Inc PFE.N and Moderna Inc MRNA.O possible as soon as October or November. Disappointing results could further shake markets that have recently grown turbulent on worries over fiscal stimulus delays and uncertainty around the Nov. 3 U.S. presidential election.
“The anticipation is that this stuff is going to work,” said Walter Todd, chief investment officer at Greenwood Capital in South Carolina. “So any news to the contrary could be a risk to the market.”
Some forecasts on vaccine availability have grown less optimistic. Good Judgment, a company whose forecasters make predictions based on publicly available evidence, put the chances that a vaccine will be widely distributed in the United States by the end of March at 54%. That is up from an estimate of less than 20% in early July, but down from above 70% earlier this month.
Pfizer and Moderna could report initial efficacy results in October or November based on an early read of data, followed by data from companies such as AstraZeneca, Johnson & Johnson JNJ.N and Novavax Inc NVAX.O.
An approval or emergency use authorization this year could lead to a surge in travel, leisure and other stocks that have been decimated by pandemic-related shutdowns, while also fueling a long-awaited shift into value stocks from tech and other growth names that have led the market for years.
Even if a vaccine is approved, questions persist about how easily and quickly it can be distributed. President Trump and his health officials have issued conflicting predictions about when the general public could have access.
· China amends customs supervision on crude oil imports to improve efficiency
Chinese customs said on Tuesday it will amend the way it supervises crude oil imports as part of a broader effort to boost efficiency, allowing cargoes to clear customs before quality inspections have been finalised.
Key import oil terminals along China’s coast, including the provinces of Shandong, Zhejiang and Guangdong, suffered severe congestion between May and August as record crude purchases arrived in the country.
Effective from Oct. 1, importers will be allowed to start offloading oil once customs officers have collected key information and a sample of oil, the General Administration of Customs said in a statement its website.
Importers will still only be allowed to use or sell the oil once subsequent laboratory tests are completed.
Any problems related to safety, quality or evidence of trade fraud will be dealt with as normal, customs said.
· Say 'No!' to US robbery of TikTok: Global Times editorial
It was reported Sunday, Beijing time, that US President Donald Trump approved a deal in principle between TikTok's parent company ByteDance, and Oracle and Walmart. The main content of the deal was later disclosed. From the information provided by the US, the deal was unfair. It caters to the unreasonable demands of Washington. It's hard for us to believe that Beijing will approve such an agreement.
Although people can have various interpretations, some articles in the agreement show what the problems are.
For instance, American citizens will take up four of the five board seats for TikTok Global and only one can be Chinese. The board of TikTok Global would include a national security director, who will have to be approved by the US.
Oracle will have the authority to check the source code of TikTok USA and updates. As the TikTok and Douyin should have the same source code, this means the US can get to know the operations of Douyin, the Chinese version of TikTok
· Ex-Goldman economist Jim O’Neill says China’s economy ‘well on the way’ to recover from coronavirus
“I suspect Chinese GDP growth could actually end 2020 as net positive still,” O’Neill told CNBC in an interview. “By end 2021, Chinese GDP growth will have possibly even made up for, not only the losses, but the loss in the trend also.”
· Coronavirus dampens seasonal cheer in China's Christmas production hub
· Hong Kong Extends Social Distancing Measures for Another Week
Hong Kong will extend virus-related social distancing measures for another week amid persisting signs of hidden Covid-19 transmission, Chief Executive Carrie Lam said.
Despite moderating numbers, “we still have unknown cases and it implies that there is silent transmission chain in our community,” Lam said at a weekly briefing on Tuesday before a meeting of her advisory Executive Council.
Bars, pools and theme parks were allowed to reopen last Friday. Bars were allowed to remain open until midnight, and dine-in services at restaurants were extended by two hours, also until 12 a.m. The limit on public gatherings will be kept at four people.
· Thai cabinet approves $1.6 billion cash handouts to boost spending
Thailand’s cabinet on Tuesday approved cash handouts worth 51 billion baht ($1.6 billion) in a bid to boost domestic consumption and help an economy suffering from the impacts of the coronavirus pandemic.
The handouts will help increase spending power and reduce living costs, Prime Minister Prayuth Chan-ocha told a briefing.
· Singapore central bank 'closely studying' reports on suspicious bank transfers
· India's new coronavirus infections at lowest in almost a month
India reported 75,083 new cases of the novel coronavirus in the last 24 hours, according to federal health data released on Tuesday, the lowest daily tally in almost a month.
There were 1,053 deaths over the same period.
There have been 5.6 million cases in total in the country, second only behind the United States.
· Oil steady as U.S. storm eases but demand recovery fears persist
Oil futures were little changed on Tuesday after sharp overnight losses, as the latest tropical storm in the Gulf of Mexico lost strength, but worries about fuel demand persisted with flare-ups around the globe in coronavirus cases.
Brent crude futures edged 3 cents, or 0.1%, lower to $41.41 a barrel at 0637 GMT, reversing earlier small gains.
U.S. West Texas Intermediate (WTI) crude futures CLc1 for October, due to expire on Tuesday, slipped 4 cents, or 0.1%, to $39.27 a barrel. The more active November contract shed 3 cents, or 0.1%, to $39.51.
Reference: Reuters, CNBC, Global Times
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