· Dollar firm as virus’ spread and stimulus stalemate raise caution
The dollar found support on Monday, as surging coronavirus cases in Europe and the United States and a lack of progress toward a U.S. stimulus package put traders in a cautious mood, although hopes for a Brexit trade deal held sterling steady.
Against a basket of currencies, the greenback trod water in the Asia session, after having fallen broadly last week. Against the risk-sensitive Australian dollar and against the euro it gained about 0.2%.
Sterling, however, held firm at $1.3024.
The United States has recorded its highest ever number of new COVID-19 cases for two consecutive days and so has France. Spain announced a new state of emergency and Italy has ordered restaurants and bars to shut by 6 p.m.
U.S. House Speaker Nancy Pelosi said on Sunday that she expected a White House response on Monday regarding the latest stimulus spending plan, but there have been few tangible signs that a long-stalled deal is actually nearer.
The Japanese yen slipped a fraction on the firmer dollar to 104.85 per dollar and other Asian currencies also traded a touch lower.
Hopes for a breakthrough in the trade-deal stalemate between Britain and Europe held the pound steady above $1.30.
Over the weekend, Britain’s Northern Island minister said there was a good chance of a trade deal.
Blue waves and central banks
The week ahead holds three major central bank meetings and the final sprint to the polls in the United States.
The Bank of Canada and Bank of Japan are expected to hold fire for now, while the market assumes the European Central Bank will sound cautious on inflation and growth, even if it skips a further easing on Thursday.
“The risk is that ECB President Christine Lagarde strikes a dovish tone during her post-meeting press conference,” said Commonwealth Bank of Australia currency analyst Joe Capurso.
“If President Lagarde emphasises the downside risks facing the Eurozone economy, the counter-cyclical dollar can rise.”
Analysts also reckon that a Joe Biden victory next week, especially if the Democrats win control of the Senate, would likely herald a large U.S. stimulus package. But investors are treading carefully.
Elsewhere, China’s top leaders chart the country’s economic course for 2021-2025 at a key meeting starting on Monday, and may adopt a lower or more flexible growth target.
The yuan, which has soared more than 7% since May as China has led the world’s recovery from the COVID-19 pandemic, edged lower with the broader mood to 6.6852 per dollar.
Later on Monday, investors are watching for a German sentiment survey at 0900 GMT, following a robust Purchasing Managers’ Index figure last week, and U.S. housing data, due at 1400 GMT.
· Trump, Biden in final full week of campaigning as virus looms large
President Donald Trump and Democratic challenger Joe Biden on Monday are down to the final full week of campaigning before the Nov. 3 election, as surging coronavirus cases and a COVID-19 outbreak within Vice President Mike Pence’s staff keep the focus of the race on the pandemic.
With eight days to go before Election Day, more than 59.1 million Americans have already voted in person or by mail, a pace of early voting that could lead to the highest turnout rate in more than a century, according to data from the U.S. Elections Project at the University of Florida.
Biden was expected to remain in his home state of Delaware on Monday. He is scheduled to travel to Georgia on Tuesday, with stops in Atlanta and Warm Springs, a town of about 400 people where Democratic President Franklin D. Roosevelt, who took office during the Great Depression and rolled out his New Deal recovery program, died in 1945.
· Four in ten supporters of Biden, Trump would not accept election defeat
More than four in ten supporters of both President Donald Trump and his Democratic challenger, Joe Biden, said they would not accept the result of the November election if their preferred candidate loses, Reuters/Ipsos poll found.
The survey, conducted from Oct. 13-20, shows 43% of Biden supporters would not accept a Trump victory, while 41% of Americans who want to re-elect Trump would not accept a win by Biden.
· BOJ to hold fire, signal readiness to extend COVID-response package
The Bank of Japan is set to keep monetary policy steady on Thursday and signal its readiness to extend the duration of a crisis-response package that has become a primary tool to deal with the deepening economic impact of the coronavirus crisis.
While the BOJ is seen slightly cutting its growth and price forecasts, many board members see no immediate need to expand stimulus on the view the world’s third-largest economy is headed for a modest recovery, sources have told Reuters.
The central bank is expected to maintain its yield curve control (YCC) targets at -0.1% for short-term interest rates and 0% for long-term yields at a two-day rate review ending on Thursday.
· Singapore temporarily halts use of two flu vaccines after South Korea deaths
Singapore has temporarily halted the use of two influenza vaccines as a precaution after some people who received them in South Korea died, becoming among the first countries to publicly announce a halt of the vaccines’ usage.
· Coronavirus pandemic deals body blow to investing models that rely on tech and data, study shows
The coronavirus pandemic has dealt a body blow to the quantitative model-based style of investing, with a majority of the firms using such strategies negatively impacted, a study by Refinitiv has found.
In a report, financial data provider Refinitiv said 72% of such investors were hurt by the pandemic. Some 12% declared their models obsolete and 15% were building new ones.
Machine-learning refers to the use of complicated mathematical models and algorithms based on historical data in order to make predictions without being explicitly programmed to do so.
· Oil falls more than 1% as surging COVID-19 cases stoke demand fears
Oil prices fell on Monday, extending last week’s losses, as a jump in COVID-19 infections in the United States and Europe raised alarms over crude demand, while the prospect of increased supply also hurt sentiment.
Brent crude was down by 53 cents, or 1.3%, at $41.24 by 0052 GMT. U.S. West Texas Intermediate (WTI) dropped 53 cents, or 1.3%, to $39.32, having fallen more than a dollar shortly after the start of trading.
Brent fell 2.7% last week and WTI dropped 2.5%.
“A resurgence in COVID-19 cases in Europe and North America has stopped the recovery in demand in its tracks,” ANZ Research said in a note.
“If market conditions worsen, (OPEC+) will have no choice but to delay the increase of quotas by a month or two at its meeting on 1 December,” ANZ said.
· Analysis: Tax hikes may help Russian oil majors stomach OPEC output curbs
Higher taxes imposed on Russia’s energy sector could make prolonged output curbs by OPEC and allied producers easier to stomach for Moscow’s energy majors.
The new system of taxes, approved by President Vladimir Putin earlier this month to help Russia weather the economic fallout from the COVID-19 pandemic, make it more expensive for energy companies to boost production from mature oil fields and produce more heavy crude.
That could make Russia’s energy sector more willing to accept tighter policies from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, rather than engaging in a tussle with other oil-producing countries such as Saudi Arabia over oil market share, analysts say.
OPEC+, of which Russia is a member, has been reducing oil output to the tune of 7.7 million barrels per day, or over 8.5% of global consumption, in order to help the sluggish oil market.
“I think that the tax changes in oil industry were worked out while taking into account the OPEC+ deal and its influence on the output of the Russian companies,” said Karen Kostanyan of Bank of America Merrill Lynch.
· More than 200,000 protest in Belarus capital as leader faces deadline to meet demands
Tens of thousands of protesters in Belarus swarmed the streets of the capital Sunday, pressing for the resignation of the country’s authoritarian president, and an opposition leader said a nationwide strike would start Monday.
· Malaysia, amid political turmoil, says to host virtual APEC summit in November
Malaysia said on Monday it will host the first ever virtual summit of leaders from Asia-Pacific Economic Cooperation (APEC) nations in November, amid political uncertainty faced by its Prime Minister Muhyiddin Yassin.
Muhyiddin is facing calls to resign as doubts swirled over the support he commands, after the Malaysian king rejected his request to declare a state of emergency to fight the pandemic.
· 'Please resign,' Thai opposition tells PM at protest debate
Thailand’s biggest opposition party called on Monday for Prime Minister Prayuth Chan-ocha to resign, as parliament opened a special session called by the former junta leader to discuss months of protests.
“The prime minister is a major obstacle and burden to the country. Please resign and everything will end well,” said Sompong Amornvivat, leader of the opposition Pheu Thai party, the largest single party in parliament.
Reference: CNBC, Reuters
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