· Stimulus hopes press dollar to one-month low; yuan soars
The dollar hit a one-month low on Wednesday as investors who are optimistic about a pre-election U.S. stimulus package sought out riskier currencies, while the strong recovery in China’s economy helped drive the yuan to a two-year high.
President Donald Trump has raised hopes for a stimulus breakthrough, saying he was willing to accept a large aid bill, despite opposition from his own Republican Party.
That sent U.S. 10-year Treasury yields to a four-month high, in anticipation of more government borrowing, and pressed the dollar index to its lowest level since September by boosting investors’ mood.
Doubts that any package can actually pass the Senate are keeping the dollar from breaching last month’s two-year lows.
The dollar index was last down about 0.1% in Asia.
The euro hit a one-month high of $1.1844.
In contrast to the dollar’s dependence on stimulus hopes, the yuan extended a remarkable rally on Wednesday, hitting a 27-month high and pulling China-exposed Asian currencies with it.
The yuan has soared 7.6% on the dollar since May as China has led the global coronavirus recovery and its stock and bond markets have soaked up offshore capital flows.
The South Korean won, Singapore dollar and Thai baht also rallied. The Indonesian rupiah hit a two-week high after solid demand in a Tuesday debt auction.
· World trade rebounding slowly, outlook uncertain - U.N. report
The value of global trade is set to fall by 7% to 9% in 2020 from the previous year, despite signs of a fragile rebound led by China in the third quarter, a United Nations report said on Wednesday.
Global trade recovered somewhat in the third quarter, when it was estimated at about 4.5% less than in the same period a year ago, the agency said in its latest update.
· Analysis: Rating agency scrutiny raises stakes for U.S. election process
As Americans go to the polls, some of the more influential observers of the election process will be the agencies that determine the country’s credit rating.
The country’s nearly top-notch, coveted rating is partly a reflection of the dollar’s status as the world’s reserve currency and the fact that the roughly $20 trillion U.S. Treasury market is the largest and most liquid in the world.
Yet two of the three major U.S. credit agencies, Fitch Ratings and Moody’s Investors Service, which give the United States their top rating of AAA and Aaa respectively, are watching the election and have said that anything other than a smooth handover or retention of power could cause concern.
The third major agency, Standard & Poor’s, rates the country’s long-term debt at AA+, just below the highest grade, partly on fiscal concerns. S&P has also cited political disagreements as a constraint on its ratings.
· U.S. coronavirus aid talks imperiled amid Republican opposition
The White House and Democrats in the U.S. Congress moved closer to agreement on a new coronavirus relief package on Tuesday as President Donald Trump said he was willing to accept a large aid bill despite opposition from his own Republican Party.
With just two weeks until the U.S. presidential election, Trump signaled a willingness to go along with more than $2.2 trillion in new COVID-19 relief, a figure Democrats have been pushing for months.
Senate Majority Leader Mitch McConnell, a Republican, publicly said he would bring up a deal if one is reached by Treasury Secretary Steven Mnuchin and Democratic House Speaker Nancy Pelosi and approved by the House of Representatives.
Holding a vote on a costly new package of aid could prove politically difficult for some Senate Republicans running for re-election in conservative states.
The Senate also plans to vote on Wednesday on a $500 billion-plus Republican proposal to include unemployment benefits and aid to schools. It would provide people with $300 in supplemental federal weekly unemployment benefits, while the Democrats want to return to the $600 weekly level in the measure approved earlier this year.
Democrats blocked a similar Republican proposal last month, and the measure on Wednesday is also expected to fail.
· Biden has big cash advantage over Trump in race's final stretch
· China's 2020 auto production and sales could return to 2019 levels: government official
China’s 2020 auto production and sales may possibly be close to last year’s levels should they keep growing in the fourth quarter, an official from the country’s state planner said on Wednesday.
· Japan's Suga opposes actions that boost tension in South China Sea
· BOJ member says swift action needed if COVID-19 delays economic recovery
Bank of Japan board member Makoto Sakurai said on Wednesday the central bank must take “swift and appropriate” action if the coronavirus shock delays the country’s economic recovery.
· Thailand welcomes tourists back as Bangkok protests heat up
Thailand received a group of tourists from China on Tuesday, its first such arrivals since commercial flights were banned in April to combat the coronavirus pandemic, the visitors seemingly undeterred by escalating street demonstrations in Bangkok.
Thirty-nine tourists from Shanghai arrived on Tuesday night, the deputy director of the country’s main Suvarnabhumi Airport, Kittipong Kittikachorn, said in a statement.
· Oil prices slip as U.S. inventory build stokes fears of supply glut
Oil prices eased on Wednesday after a surprise build-up in U.S. crude stockpiles stoked concerns about a global supply glut even as a spike in global COVID-19 cases fuelled fears of slower recovery in fuel demand.
Brent crude futures LCOc1 for December delivery were at $42.93 a barrel, down 23 cents, or 0.5%, as of 0332 GMT, while December U.S. West Texas Intermediate (WTI) crude CLc1 futures slipped 20 cents, or 0.5%, to $41.50 a barrel. Both benchmarks rose in the previous session.
“A U.S. inventory build, together with the recent resurgence of the COVID-19 cases worldwide, prompted investors to make position adjustments,” said Chiyoki Chen, chief analyst at commodity broker Sunward Trading.
Crude inventories rose by 584,000 barrels in the week to Oct. 16 to about 490.6 million barrels, data from industry group the American Petroleum Institute showed, compared with analysts’ expectations in a Reuters poll for a draw of 1 million barrels.
Reference: Reuters, CNBC
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