· Dollar rises on coronavirus unease, Aussie and Kiwi hurt by rate outlook
The U.S. dollar rose against major currencies on Wednesday, supported by positive U.S. economic data and concerns about a second wave of coronavirus infections in Europe and Britain.
Both the Australian and New Zealand dollars were undermined by a dovish slant on policy by their respective central banks.
The Aussie hit a six-week low on growing expectations the Reserve Bank of Australia may cut interest rates next month.
The kiwi dollar edged lower in choppy trade after the country’s central bank kept monetary policy unchanged but hinted at further easing to help the economy.
The greenback is likely to continue to grind higher in the short term as the coronavirus rattles sentiment in Europe, but uncertainty about this year’s U.S. presidential election means the dollar could be prone to more volatile swings.
The dollar index, which pits the dollar against a basket of six major currencies, rose to 94.197 on Wednesday, the highest in two months.
Sentiment for the euro has slowly weakened as investors grow increasingly worried about surging coronavirus infections in countries like France and Spain, raising the risk of fresh lockdowns.
Many euro zone countries have reintroduced travel restrictions, forcing airlines to scale back passenger services after a relatively quick run up over the summer.
Traders in the pound and the euro are also worried that Britain and the European Union will fail to agree a free trade deal, which would cause additional economic strain.
The dollar edged up to $1.1675 per euro on Wednesday, which is the highest since July 27.
The pound bought $1.2721, near the lowest since late July, after British Prime Minister Boris Johnson unveiled on Tuesday new restrictions on business activity to tackle a second wave of the coronavirus.
The U.S. currency rose to 105.98 yen.
· White House urges Congress to pass separate aid bill for airlines
The Trump administration is urging U.S. lawmakers to pass separate bills to aid airlines and other sectors, given failure to reach agreement on a broader package of stimulus funding, White House Press Secretary Kayleigh McEnany said on Tuesday.
· Reuters/Ipsos poll shows Biden leading Trump in Michigan, tied in North Carolina
Democratic presidential candidate Joe Biden led President Donald Trump by 5 percentage points among likely voters in Michigan, while the two were even in North Carolina, according to Reuters/Ipsos opinion polls released on Tuesday.
MICHIGAN:
* Voting for Biden: 49%
* Voting for Trump: 44%
* 50% said Biden would be better at handling the coronavirus pandemic. 44% said Trump would be better.
* 48% said Trump would be better at managing the economy. 45% said Biden would be better.
NORTH CAROLINA:
* Voting for Biden: 47%
* Voting for Trump: 47%
* 47% said Biden would be better at handling the coronavirus pandemic. 45% said Trump would be better.
* 51% said Trump would be better at managing the economy. 44% said Biden would be better.
· Euro zone growth and inflation outlook steady, ECB's Mersch says
The growth and inflation outlook in the euro zone has not deteriorated since the European Central Bank decided earlier this month to keep policy unchanged, ECB board member Yves Mersch told Bloomberg.
· Euro zone recovery stutters in September as coronavirus infections rise
Euro zone business activity has taken a hit in the month of September as countries face a second wave of coronavirus infections, initial data showed Wednesday.
The European Centre for Disease Prevention and Control said that as of Sep. 22, there had been 2.9 million confirmed infections in the region, with Spain and France now seeing daily cases rise above the 10,000 mark. Governments have announced new restrictions to prevent the spread of the virus and economists have started considering the economic ramifications of the new measures.
“The sharp rise in Covid-19 cases recorded across France during September helped to explain the first fall in business activity since May,” Eliot Kerr, an economist at IHS Markit, said in a statement on Wednesday.
A sharp fall in activity in the French services industry was not fully offset by manufacturing output. This led the overall index for France to drop for the first time in four months, IHS Markit reported.
· The yen could rally strongly against the dollar, according to Credit Suisse
Expect the Japanese yen to strengthen dramatically against the dollar in the long run, according to a prediction by one strategist at Credit Suisse.
Credit Suisse’s Jason Daw told CNBC the Japanese currency will “naturally drift” toward the 100 level against the dollar.
As of Wednesday morning in Tokyo, the yen is at 105.16 per dollar, off levels below 104.4 per dollar seen a few days ago but still stronger than levels above 105.6 against the greenback seen last week.
“The Bank of Japan’s not easing as fast as the Fed,” he said. ”“On a relative basis, from a monetary policy perspective, the yen could get a little bit stronger.”
· BOJ will continue experiments for issuing CBDCs: Kuroda
The Bank of Japan will work closely with overseas central banks in conducting experiments on issuing its own digital currency in the future, BOJ Governor Haruhiko Kuroda said on Wednesday.
“The BOJ does not have any plan to issue central bank digital currencies (CBDC) now,” Kuroda said in an online meeting with business leaders in Osaka, western Japan.
· BOJ Kuroda stresses readiness to ease further, warns of high uncertainty
Bank of Japan Governor Haruhiko Kuroda said on Wednesday the central bank was ready to ramp up stimulus, as the coronavirus pandemic keeps the economic outlook highly uncertain.
“There is a lot of uncertainty on how the pandemic could affect the economy and financial conditions,” Kuroda said.
“As such, we’ll keep an eye out on the impact for the time being and take additional easing steps without hesitation if necessary,” he said in a speech delivered online to business leaders in Osaka, western Japan.
· Japan factory activity struggles to recover as output falls - PMI
Japan’s factory activity extended declines in September largely due to a sharper fall in output, as the world’s third-largest economy struggles to stage a robust recovery from the coronavirus pandemic.
The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) was largely unchanged at 47.3 in September compared with a final 47.2 in the previous month.
· Japan PM wants basic policy on new digital agency by year-end - Media
Japanese Prime Minister Yoshihide Suga said on Wednesday he wanted to compile a basic policy on a new digital agency by the end of this year and submit the bills to next year’s ordinary session of parliament, local media reported.
· Japan to further ease COVID-19 entry curbs but not for tourists: Asahi
Japan is considering allowing more foreigners into the country for longer stays starting as early as next month, while keeping the COVID-19 entry curbs in place for tourists, the Asahi newspaper reported on Wednesday.
· Canada's Trudeau to unveil plan to address coronavirus outbreak, revive economy
Canadian Prime Minister Justin Trudeau will unveil on Wednesday what he says is a far-reaching plan to help the economy recover from the coronavirus pandemic while ensuring efforts to fight the outbreak do not falter.
· New Zealand central bank holds rates but hints at further easing
New Zealand’s central bank held its official cash rate at a record low on Wednesday but hinted at further easing and warned the economy may need support for a long time as the world grapples with the coronavirus pandemic.
The decision to hold the Official Cash Rate (OCR) at 0.25% was in line with the unanimous expectations of economists in a Reuters poll.
· Australia preliminary retail sales down 4.2% in August, Victoria hit hard
Australian retail sales fell 4.2% in August from the month earlier, preliminary data showed on Wednesday, with the virus-stricken state of Victoria bearing the brunt of the downturn.
Victoria saw large falls across all industries, except food retailing as a strict lockdown saw many businesses shut their doors to customers.
Although the falls were largest in Victoria, there were also declines in most other states, the data from the Australian Bureau of Statistics (ABS) showed. Excluding Victoria, retail trade across the rest of the country fell 1.5% in August, from July.
· Westpac expects monetary easing by Australia central bank in October
Westpac WBC.AX economist Bill Evans said on Wednesday he now expects Australia's central bank to cut the cash rate and the three-year bond yield target to 10 basis points at its Oct.6 board meeting.
“This will be a Team Australia event preceding the Federal Budget announcement later that day,” Evans said, adding the prospect of the Reserve Bank of Australia (RBA) sitting back to assess the budget was not appropriate during these “unique times.”
· Singapore's deflation extends to seventh month in core gauge
Singapore’s main price gauge contracted for the seventh consecutive month in August, data showed on Wednesday, with prices falling 0.3% from a year earlier.
Authorities in the city-state, battling its deepest ever recession due to the COVID-19 pandemic, expect core and headline inflation to average between -1% and 0% in 2020.
· India's coronavirus infections surge again after dip
India’s coronavirus infections surged again on Wednesday, a day after falling to their lowest figure in almost a month.
In the last 24 hours, there were 83,347 new cases, with 1,085 deaths, federal health data showed.
· Oil falls after surprise increase in U.S. crude inventories
Oil prices fell more than 1% on Wednesday after an industry group reported an unexpected rise in U.S. crude inventories, renewing concerns about fuel demand that caused a steep selloff earlier in the week.
Brent crude futures fell 33 cents, or 0.8%, at $41.39 a barrel by 0641 GMT, and earlier fell by as much as 1.2% to $40.21.
U.S. West Texas Intermediate crude futures dropped 40 cents, or 1%, to $39.40 a barrel after earlier declining by as much as 1.4% to $39.26.
Both contracts fell more than 4% on Monday, the most in two weeks, though they rose on Tuesday.
Reference: Reuters, CNBC
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