· Dollar loses ground on hopes for compromise on U.S. stimulus
The dollar was on the defensive at a one-week low on Thursday, as robust U.S. data and fresh hopes for U.S. fiscal stimulus had investors confident enough about economic recovery prospects to seek out riskier currencies.
Along with strong U.S. labour and manufacturing data, that helped stocks to rally and the mood pulled the dollar to a one-week low of 93.664 against a basket of currencies.
Mnuchin said later on Fox Business News that he would not accept the Democrats’ proposed $2.2 trillion aid package, rather something closer to $1.5 trillion, adding that an agreement had been reached on direct payments to Americans.
Chinese data on Wednesday had also shown the recovery on track in the world’s second-biggest economy.
The yuan CNH= edged up to a week-high 6.7804 in offshore trade on Thursday, though volumes are thin and the onshore market closed for holidays until Oct. 9.
Nevertheless, firmness in the safe-haven Japanese yen indicated that plenty of underlying caution still remains. The yen JPY= held at 105.45 in Asia on Thursday, after climbing in the wake of a chaotic first U.S. presidential debate.
It ended its quarter since mid-2019 on Wednesday with a 2.4% gain over the three months to Sept. 30 as some of the exuberance in risk assets wore off, particularly in September.
Gains in the euro overnight were also muted after European Central Bank President Christine Lagarde hinted that a strategy overhaul, and a more accommodative approach to inflation, could be possible.
The euro EUR= edged up 0.2% on Wednesday and held at $1.1726 on Thursday. The pound GBP= was steady at $1.2921.
Final purchasing managers index figures are due in Europe and Britain later on Thursday, followed by the ISM manufacturing survey in the United States and jobless claims data - all providing an update on the progress of the global coronavirus recovery.
· U.S. proposes $1.5 trillion stimulus, $20 billion aid extension for airlines
The Trump administration has proposed including a $20 billion extension in aid for the battered airline industry in a new stimulus proposal to House Democrats worth over $1.5 trillion, White House chief of staff Mark Meadows said on Wednesday.
House Democrats, who had sought $2.2 trillion in relief funds to combat the effects of the coronavirus on the U.S. economy, had been at loggerheads over the new measure with the White House, which had proposed legislation worth $1.5 trillion.
“If it starts with a 2, it’s going to be a real problem,” he told reporters en route to Washington from the swing state of Minnesota where U.S. President Donald Trump headlined a rally ahead of elections in November.
· Trump signs bill to prevent government shutdown after funding briefly lapses
· U.S. targets only one percent of Chinese students over security: White House official
The United States is targeting only about one percent of the 400,000 Chinese students in the United States over China’s bid to gather U.S. technology and other information, a top White House said official said on Wednesday.
· The U.S. and China could slip into a ‘new cold war’ that pushes countries to pick sides
The U.S. and China have “diametrically opposed values” and will eventually slip into a “new cold war” in the coming decades, said a China analyst from Fitch Solutions.
“By a new cold war, I mean an all out, perhaps generation long, global economic, military and ideological struggle that could lead to a bifurcation of large parts of the world into a pro-U.S. bloc and a pro-China bloc with significant numbers of countries caught in between,” said Darren Tay from the Asia country risk team at the data research firm.
The split between the world’s two largest economies would likely force Southeast Asian countries to take sides, he said, even though they would want to be “pragmatic” and remain friendly with both countries for as long as possible.
· Global housing markets face tougher year in 2021: Reuters poll
Most major housing markets won’t keep up with consumer price inflation in 2021 and are faced with multiple downside risks despite rising strongly this year amid the coronavirus pandemic and rock-bottom interest rates, Reuters polls showed.
While the Sept. 15-29 poll of 123 analysts showed average home prices would rise in a few countries this year on pent-up demand and a shortage in supply, that surge was expected to be tamed next year. Still, the latest forecasts were slightly better than in the June poll.
· More than 7,500 finance jobs have left Britain for Europe - EY Brexit tracker
More than 7,500 finance jobs and a trillion pounds in assets have already left Britain for the European Union as banks prepare for full-blown Brexit in January, EY consultants said on Thursday.
Banks, insurers and asset managers have opened new or expanded existing hubs in the EU to continue serving their clients given that future access will be more limited once transition arrangements expire on Dec. 31.
The number of jobs and amount of assets is still a fraction of total jobs and assets held by Britain’s financial sector.
· Boris Johnson urges Brits to stick to the Covid plan to avoid a full lockdown
U.K. Prime Minister Boris Johnson on Wednesday called on Britons to stick to the rules in order to avoid tougher coronavirus restrictions, as the country grapples with a swift upsurge in the number of reported coronavirus cases.
· Japan business sentiment perks up as hit from pandemic begins to ease
Japanese business sentiment improved in July-September from a 11-year low hit three months ago, a key central bank survey showed, in a sign the economy is gradually emerging from the devastating hit from the coronavirus pandemic.
The data offers some hope for new Prime Minister Yoshihide Suga’s efforts to achieve an economic revival from the crisis and pave the way for hosting next year’s Tokyo Olympic Games.
But factory activity remained shaky and corporate capital expenditure plans were at their weakest since the 2009 global financial crisis, underscoring the challenge of pulling the world’s third-largest economy sustainably out of its slump.
As the pandemic’s pain persists, a ruling party heavyweight signalled Japan’s readiness to compile a “large-scale, bold” additional spending package.
The headline index for big manufacturers’ sentiment improved to minus 27 in September, off a 11-year low of minus 34 in June but worse than a median market forecast of minus 23, the Bank of Japan’s closely watched “tankan” survey showed on Thursday.
· China’s market reforms have benefited small and medium-sized companies, says JPMorgan
As China continues to push toward further reforms in its financial markets, one of the changes the country made was to revamp listing rules for the ChiNext start-up board.
The move has benefited small and medium-sized businesses, as well as technology firms, according to Chaoping Zhu, a global market strategist at JPMorgan Asset Management.
· Oil prices gain on renewed U.S. stimulus hopes
Oil prices rose on Thursday as renewed hopes for U.S. fiscal stimulus provided support but worries over rising infections hampering fuel demand could cap gains.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 13 cents to $40.35 a barrel at 0645 GMT , after jumping 2.4% on Wednesday.
Brent crude LCOc1 futures gained 11 cents to $42.41 a barrel, after falling 0.2% overnight.
The Trump administration has proposed a new stimulus package to House Democrats worth over $1.5 trillion.
Reference: Reuters, CNBC
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