· Dollar steady as all eyes on U.S. presidential debate
The dollar held steady against a basket of currencies on Tuesday as financial markets braced for the first U.S. presidential debate, while traders also tracked developments on the U.S. stimulus bill.
The dollar index was unchanged at 94.209, drifting away from a two-month high of 94.745 reached last week, as stock markets made solid gains partly on upbeat China data with Wall Street rebounding following last week’s selloff.
All eyes are on the first U.S. presidential election debate where Democrat Joe Biden and Republican Donald Trump will square off later on Tuesday (0100 GMT on Wednesday).
Market participants are also keeping a close watch on any stimulus package plans.
“If the debate puts Trump on the back foot and Biden keeps his lead, I think it could lead people to let go of their dollars,” said Daisuke Karakama, chief market economist at Mizuho Bank.
Sterling extended its overnight gains on optimism about a Brexit trade deal as the European Union and Britain kicked off a decisive week of talks.
The British pound edged 0.18% higher, fetching $1.2856 in Asian trade, having touched $1.2930 overnight.
While both the EU and Britain said a post-Brexit agreement was still some way off, European Commission chief Ursula von der Leyen said a deal was still possible.
Separately, the pound also found support overnight as Bank of England Deputy Governor Dave Ramsden said he thought the floor for the central bank’s key interest rate was 0.1%. Ramsden however said the BoE was “duty-bound” to consider pushing the rates below zero.
The euro steadied at $1.1674, with its recovery capped by European Central Bank President Christine Lagarde’s remarks that the external value of the shared currency has an impact on inflation, and that policymakers will monitor currency movements.
As Europe grapples with a surge in new coronavirus infections, traders will be looking out for euro zone consumer confidence and industrial sentiment data for September for signs of any impact on the region’s economic recovery.
Elsewhere, the dollar was little changed against the yen at 105.52 yen.
“The problem right now is that political risks in both sides of the world are neutralizing the yen momentum,” said Stephen Innes, chief global market strategist at AxiCorp.
“I think ultimately, if we go through the inflation area impacts, the U.S. real yields dropping more – the markets gravitate back more frequently into the yen,” he said.
· Treasury yields fall ahead of U.S. presidential debate
U.S. government debt prices were higher on Tuesday morning as investors monitored stimulus discussions and awaited the first debate ahead of the U.S. presidential election.
At around 2:20 a.m. ET, the yield on the benchmark 10-year Treasury note dropped 1.04% to trade at 0.6561%. In the meantime, the yield on the 30-year Treasury bond fell by 0.57% to trade at 1.4149%. Yields move inversely to prices.
· U.S. income inequality narrowed slightly over last three years: Fed
Income inequality in the United States narrowed in the first three years of the Trump administration as rising wages and a low unemployment rate fueled gains for lower-income and less educated families, according to U.S. Federal Reserve data released on Monday.
· EU negotiators willing to work on legal agreement with UK - The Times
European Union negotiators have signaled that they are willing to begin work on a joint legal text of a trade agreement with the UK, ahead of trade talks that resume on Tuesday, The Times reported on Tuesday.
EU chief negotiator Michel Barnier is ready to begin work on a joint draft version of a free trade agreement, known as a "consolidated legal text", this week, the newspaper reported.
· Pandemic to keep Asia's growth at lowest since 1967, warns World Bank
The coronavirus pandemic is expected to lead to the slowest growth in more than 50 years in East Asia and the Pacific as well as China, while up to 38 million people are set to be pushed back into poverty, the World Bank said in an economic update on Monday.
The bank said the region this year is projected to grow by only 0.9%, the lowest rate since 1967.
Growth in China was expected to come in at 2% this year, boosted by government spending, strong exports and a low rate of new coronavirus infections since March, but held back by slow domestic consumption.
The rest of the East Asia and Pacific region was projected to see a 3.5% contraction, the World Bank said.
The bank said that 33 million people who would have in the absence of the pandemic escaped poverty would remain in it this year.
“The region is confronted with an unprecedented set of challenges,” said Victoria Kwakwa, vice-president for East Asia and the Pacific at the World Bank.
“But there are smart policy options available that can soften these tradeoffs - such as investing in testing and tracing capacity and durably expanding social protection to cover the poor and the informal sector.”
· China needs a raft of reforms to make new economic strategy work: advisers
China will need a plethora of reforms if it is to make a new economic strategy that relies mainly on domestic consumption work, advisers to the Chinese cabinet said on Tuesday.
President Xi Jinping has proposed a “dual circulation” strategy for the next phase of economic development in which China will rely predominantly on “domestic circulation”, to be supported by “international circulation”.
“Fundamentally we must rely on reforms, and we need to deepen reforms.”
· Sanctions-hit Huawei ramps up investment in Chinese tech sector
Huawei Technologies has built up stakes in Chinese semiconductor companies and other tech businesses as the world’s largest telecoms equipment maker bolsters its supply chain in the face of pressure from the United States.
Huawei’s investment push also coincides with ramped-up government efforts to boost China’s semiconductor sector, which still lags behind leading chip producers including the United States, South Korea and Taiwan.
· Thailand to slowly restart tourism with flight from China
Thailand will receive its first foreign vacationers when a flight from China arrives next week, marking the gradual restart of a vital tourism sector battered by coronavirus travel curbs, a senior official said on Tuesday.
The first flight will have about 120 tourists from Guangzhou, flying directly to the resort island of Phuket, Tourism Authority of Thailand governor Yuthasak Supasorn told Reuters.
· Oil prices drop as demand worries counter U.S. stimulus hopes
Oil prices dropped on Tuesday, paring gains from the previous session, as persistent demand concerns due to the coronavirus pandemic outweighed hopes generated by a new U.S. stimulus package that lawmakers are struggling to agree.
More than 1 million people have died of COVID-19 worldwide as of Tuesday, a Reuters tally showed, with fatalities and infections surging in several countries.
U.S. West Texas Intermediate (WTI) crude CLc1 futures dropped 34 cents, or 0.8%, to $40.26 a barrel at 0645 GMT.
The more-active Brent crude futures for December LCOc2 fell 32 cents, or 0.8%, to $42.55 a barrel. The November contract LCOc1, which expires on Wednesday, fell 27 cents to $42.16 per barrel.
Reference: Reuters, CNBC
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