· Dollar ticks up on stalled stimulus talk; yuan falls after PBOC move
The dollar inched up in early Monday trade as riskier currencies slipped after negotiation on a U.S. stimulus package ran into resistance and as the yuan dropped after China’s central bank took a measure seen as aimed at curbing its strength.
The euro slipped 0.1% to $1.1817 while the Australian dollar shed 0.3% to $0.7222. The yen was little changed at 105.52 to the dollar.
The U.S. dollar index edged up to 93.108, bouncing back from Friday’s near-three-week low of 92.997. The index saw its biggest loss in six weeks on Friday on hopes that a deal for new U.S. stimulus would be reached.
· Democrats and Republicans dismiss Trump’s coronavirus stimulus offer, dimming hopes for a deal
Democrats in the House and Republicans in the Senate expressed opposition to President Donald Trump’s $1.8 trillion coronavirus stimulus offer over the weekend, with White House negotiators now calling for a separate vote on small business loans until the deadlock on a broader package is broken.
The White House’s offer nearly doubles the original proposal from Republicans when talks began in late summer but is about $400 billion less than the $2.2 trillion bill Democrats previously passed, leaving party leaders in Congress on both sides unhappy.
· The White House offer includes the following, according to NBC News:
Ø State and local governments — $300 billion
Ø Unemployment insurance — $400 per week, through the third week of January and retroactive to Sept. 12
Ø Liability protection for businesses
Ø Stimulus checks — $1,200 for adults, $1,000 per child
Ø Airlines — $20 billion
Ø PPP loans — $330 billion
Ø Minority lending — $10 billion
Ø Testing, tracing, vaccines, and health-care providers — $175 billion
Ø Education — $150 billion Student loan forgiveness — $25 billion
Ø Food assistance — $15 billion
Ø Child care — $25 billion
Ø Postal service — $10 billion
Ø Employee retention tax credit — $91 billion
Ø Lodging industry — $20 billion
Ø Broadband — $15 billion
· British Airways chief Alex Cruz to step down
· China moves to curb yuan strength, making it cheaper to bet against the currency
The Chinese yuan fell on Monday following recent months of rallying.
The weakness was triggered after the central bank changed rules on Saturday that made it cheaper for traders to short the currency. Shorting involves selling a borrowed asset, which can be a stock or currency, with the view that it will depreciate and can be bought back later at a lower price.
Over the weekend, the People’s Bank of China (PBOC) cut the forex risk reserve ratio for forward contracts — from 20% to zero, according to a central bank statement. Banks used to hold 20% of sales for some currency forward contracts, which essentially lock in the exchange rate for the sale of a currency on a future date. They no longer have to do so.
This move also indicates that perhaps the central bank is giving onshore corporations the option of a hedge against “any sort of dollar strength that can happen on the back of any sort of uncertainty that will be coming up in the next one and a half months,” Garg told CNBC’s “Street Signs” on Monday.
The U.S. election is due to take place in November and markets are watching it closely.
However, Garg is still positive on the yuan’s strength.
“Now that China’s growth is doing much better as compared to U.S. as well as the rest of the world, as well as the interest rate differential is also very much in favor of China, I would still think in the medium to long term, CNY (the onshore yuan) will still be intact in terms of its … outperformance,” he said.
· Worsening Sino-U.S. ties huge risk to China's financial network - PBOC vice head
Worsening Sino-U.S. relations present huge risks to technology supply chain security for China’s financial network, Fan Yifei, a central bank vice governor said on Monday, according to China Finance, a magazine run by the People’s Bank of China (PBOC).
· China's exports seen sustaining recovery in September as markets reopen
China’s exports likely posted a fourth straight month of gains in September as more trading partners reopened their economies, a Reuters poll showed, while imports are also expected to have edged back into growth.
Exports have not been as severely affected by the global slowdown as some analysts had feared, due in part to record shipments of medical supplies and robust demand for electronic products, adding to hopes for a sustained economic recovery.
In September, exports are expected to have risen 10% from a year earlier, according to a median estimate of a Reuters poll of 24 economists. Imports likely rose 0.3% on year, improving after back-to-back decline in July and August.
· South Korea's Celltrion gets approval for Phase 3 trials of COVID-19 antibody drug
· S. Korea's Exports Fall 28.8% in First 10 Days of October
South Korea's exports fell nearly 30 percent on-year in the first ten days of October mainly due to fewer working days during the five-day Chuseok holiday.
According to tentative data from the Korea Customs Service on Monday, the nation's outbound shipments stood at nine-point-three billion U.S. dollars in the cited period, down 28-point-eight percent from a year earlier.
· Thailand to focus on boosting consumption, liquidity post-coronavirus, says finance minister
Thailand will focus on spurring domestic consumption and reopening an economy badly hit by the impact of the coronavirus crisis, the country’s new finance ministry said on Monday.
Southeast Asia’s second-largest economy suffered its deepest contraction in 22 years in the second quarter as the pandemic hammered the key tourism sector and domestic activity.
The other main tasks include boosting liquidity, supporting tourism and accelerating public spending, Arkhom Termpittayapaisith told reporters on his first official day at work.
“The most urgent task is to boost liquidity for businesses affected by Covid-19 as the business sector accounts for 70% of GDP,” he said.
· Oil prices slip 1% as U.S. producers restore output post-hurricane
Oil prices dropped 1% for a second straight session on Monday as U.S. producers began restoring output post-Hurricane Delta, and after a labour strike affecting Norwegian production came to an end.
Brent crude LCOc1 for December fell 41 cents to $42.44 a barrel by 0650 GMT and U.S. West Texas Intermediate CLc1 for November was at $40.18 a barrel, down 42 cents.
Front-month prices for both contracts gained more than 9% last week, the biggest weekly rise for Brent since June. But both fell on Friday after Norwegian oil firms struck a deal with labour union officials, ending a strike that threatened to cut the country’s oil and gas output by close to 25%.
Reference: Reuters, CNBC
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