· Dollar holds ground as rising Covid-19 cases boost safe-haven demand
The dollar held gains against a basket of major currencies on Thursday as escalating coronavirus cases in Europe stoked investor fears that fresh lockdowns would further hit the already fragile economic recovery.
The safe-haven greenback steadied against a basket of six currencies at 93.39, taking a pause after its 0.3% gains in early trade.
The euro changed hands at $1.1753 after sliding to a one-week low of $1.1718 overnight. It moderately rose against the Japanese yen, last fetching 122.79 yen after hitting its weakest levels since July overnight.
Amid surging cases across Europe, the European Central Bank at its meeting is expected to resist pressure on Thursday to unveil new stimulus measures, but will likely pave the way for action in December.
“EUR can fall further if ECB President Christine Lagarde lays the ground work for further policy easing at her post meeting press conference,” said Commonwealth Bank of Australia currency analyst Kim Mundy in a note.
Traders also braced for volatility with the U.S. election less than a week away, while the country, like Europe, also faces an increase in coronavirus infections.
With former Vice President Joe Biden consistently leading in the polls over President Donald Trump, traders are cautiously betting on his victory and a possible “blue wave” outcome, where Democrats control both chambers of Congress.
“While Biden is taking the lead, Trump has been catching up in some parts of swing states,” said Shinichiro Kadota, senior strategist at Barclays.
“There is certainly a possibility of a higher volatility in the market if it becomes a closer battle, involving risks such as full results not being released (on the election day),” he said.
The onshore yuan rose modestly to 6.7104, still away from a 27-month high hit last week.
Offshore, the yuan traded at 6.7095 per dollar, with one-week yuan implied volatility hitting a more than five-year high as the U.S. elections neared.
Data due on Thursday includes U.S. third-quarter gross domestic product, which analysts expect to show record growth but not enough to make up for the pandemic impact.
The greenback firmed against the Japanese yen at 104.45 yen, having dropped to a more than one-month low on Wednesday.
The Bank of Japan on Thursday kept its monetary policy steady, while signaling that it has delivered enough stimulus for now. In the quarterly report, the BOJ trimmed its growth forecast but kept an upbeat outlook for a moderate recovery.
BOJ Governor Haruhiko Kuroda will hold a news conference later in the day to explain the decision.
· Exclusive: Biden, if elected, would consult allies on future of U.S. tariffs on China - advisers
Democrat Joe Biden would immediately consult with America’s main allies before deciding on the future of U.S. tariffs on China, seeking “collective leverage” to strengthen his hand against Beijing if he is elected president, Biden top advisers said on Wednesday.
The advisers declined to say whether the Democratic presidential candidate, if elected, would be inclined toward lifting the massive tariffs on China that Trump has used to fuel a trade war between the world’s two biggest economies.
“He’s not going to lock into any premature position before we see exactly what we’re inheriting,” Prescott said. “But consulting with allies is going to be a central part of that.”
· Dr. Fauci warns of a ‘whole lot of pain’ due to coronavirus pandemic in the coming months
White House coronavirus advisor Dr. Anthony Fauci told CNBC in an interview Wednesday that the United States is “going in the wrong direction” as coronavirus cases rise in 47 states and infected patients overwhelm hospitals across the country.
“If things do not change, if they continue on the course we’re on, there’s gonna be a whole lot of pain in this country with regard to additional cases and hospitalizations, and deaths,” the White House coronavirus taskforce member said in an interview Wednesday evening on “The News with Shepard Smith.”
Fauci noted, however, that cities like New York and Philadelphia are more equipped to deal with the surge, whereas locations in the northwest and heartland are going to have a more difficult time with the pandemic.
· Philadelphia sets citywide curfew to quell unrest after fatal shooting of Black man
· Pompeo’s ‘strong remarks’ are needed to send a message to China, says former Indian ambassador
U.S. Secretary of State Mike Pompeo’s “strong remarks” against China were needed to send a message to Beijing about its aggression, a former Indian diplomat told CNBC on Wednesday.
Pompeo made his anti-China rhetoric comments while on a state visit to New Delhi, which saw the U.S. and India sign a new defense agreement.
“Our leaders and our citizens see with increasing clarity that the CCP is no friend to democracy, the rule of law, transparency nor to freedom of navigation — the foundation of a free and open and prosperous Indo-Pacific,” the U.S. secretary said
in India, referring to the Chinese Communist Party.
· Pompeo to find 'new ways' to cooperate with Indonesia in South China Sea
U.S. Secretary of State Mike Pompeo on Thursday said Washington would find new ways to cooperate with Indonesia in the South China Sea and respected Jakarta’s efforts to safeguard its own waters while rejecting China’s “unlawful” claims in the area.
· UK COVID researcher says any lockdown should come sooner not later
· UK doing everything it can to avoid national lockdown, minister says
The British government will do everything it can to avoid putting the country into a second national lockdown and believes it can control the virus with tough local measures, housing minister Robert Jenrick said on Thursday.
Pressure was mounting on Britain to bring in nationwide restrictions after France and Germany ordered new lockdowns on Wednesday, and following the publication of a study which showed that nearly 100,000 people were catching the virus in the UK each day.
· ECB to signal more stimulus as second-wave recession fears grow
The European Central Bank is expected to resist pressure to unveil fresh stimulus measures on Thursday but it is likely to pave the way for action in December as fresh curbs to contain the coronavirus pandemic fuel fears over a new recession.
An expanding second wave of infections is threatening to overwhelm Europe before the winter, and Germany and France - the euro zone’s two largest economies - announced new lockdowns on Wednesday.
That puts pressure on ECB President Christine Lagarde to signal the ECB’s commitment to keeping financing conditions super-easy - while not however raising market expectations so much that even sizable support in December would be seen as a disappointment.
The ECB announces its policy decision at 1245 GMT, followed by Lagarde’s press conference at 1330 GMT.
· The European Commission proposed on Wednesday a series of new measures to fight the COVID-19 pandemic in the European Union, saying the new spike in infections on the continent was “alarming”.
Vassili Serebriakov, FX strategist at UBS in New York, said rising COVID-19 cases in Europe and around the world and the potential for renewed lockdowns have dented the market’s appetite for risk.
With news that Pfizer Inc has not yet been able to determine how well its late-phase COVID-19 vaccine protects against the disease adding to the cautious mood, riskier assets fell across markets.
· ‘Asia isn’t just China’: CEO of Australia’s ANZ says more companies are looking beyond China as tensions flare
Australia’s recent tensions with China have led more companies to consider diversifying to other parts of Asia – rather than just focusing on China alone, said the CEO of Australia and New Zealand Banking Group, Shayne Elliott.
ANZ — one of Australia’s largest banks — has been talking to companies in Australia and New Zealand about opportunities in Asia, he told CNBC’s Will Koulouris on Thursday.
“One of our messages has been: Asia isn’t just China. There’s a big difference between the opportunities in Japan, or Korea, or Singapore, or the Philippines or India, and we wanted to introduce people to those,” Elliott said.
Banks have been under pressure as the Australian economy undergoes its first recession in 30 years amid the coronavirus pandemic, and interest rates are at a record low.
· Analysis: As COVID persists and U.S. election nears, China growth lifts Asia
Asia is starting to see signs of economic recovery as it rides on the back of an upturn in China, which is entering a new expansion phase less than a year after it recorded the world’s first cases of COVID-19.
While international attention has been focused on the looming U.S. election and the struggle to halt the spread of the coronavirus in the Americas and Europe, China has quietly been clocking up improvements in several key sectors.
After imposing some of the world’s strictest lockdown measures early in the pandemic, China is now the only major economy forecast by the International Monetary Fund to report growth - of 1.9% - this year.
Official data showed China’s economy grew 4.9% in the September quarter from a year earlier, following 3.2% growth in the second quarter and a 6.8% contraction at the start of the year when the domestic coronavirus outbreak was at its peak and lockdowns were imposed.
“The underlying details ... make clear that the new expansion phase China is entering will prove strong and resilient,” Westpac senior economist Elliot Clarke said.
But any escalation of China-U.S trade hostilities or other geopolitical tensions after the U.S. presidential election would also be a risk for Asia’s hopes of sustained economic recovery.
· BoJ trims forecasts but predicts stronger rebound in 2021
Speaking after keeping policy on hold and cutting a growth forecast for the current fiscal year, Kuroda said the BOJ’s measures had helped an economy that is digging itself out of a severe predicament.
“Uncertainty remains high and downside risk remain large for the economic outlook. Globally the spread of the virus hasn’t been contained including in Europe and the U.S.,” Kuroda said. “I believe the uncertain situation will continue with the trajectory of the virus continuing to impact domestic and overseas economies.”
The BOJ now sees a more volatile path for the economy with a bigger contraction of 5.5% in the year ending in March followed by better growth in the following 12 months of 3.6%.
· Analysis: With improved leverage, North Korea leader Kim awaits winner of U.S. vote
North Korea’s Kim Jong Un awaits the winner of next week’s U.S. presidential election armed with greater leverage in high-stakes nuclear diplomacy, thanks to a more powerful and versatile arsenal of weapons than at the start of the Trump presidency.
‘GAME CHANGERS’
Expert assessment of the North’s new multiple rocket launchers and surface-to-surface missiles also rate them highly effective in any conflict on the peninsula.
· Oil inches up after 5% slide overnight as hurricane shuts U.S. output
Oil prices on Thursday recovered slightly from a 5% slump in the previous session, gaining support from the prospect of tighter short-term supply with two-thirds of U.S. output shut in the Gulf of Mexico as Hurricane Zeta slammed Louisiana.
Market watchers said technical support was a factor as well, after signs of a growing global oil supply glut and a second wave of coronavirus infections sent prices tumbling on Wednesday.
U.S. West Texas Intermediate (WTI) crude CLc1 futures edged up 7 cents, or 0.19%, to $37.46 a barrel by 0517 GMT, while Brent crude LCOc1 futures were up 4 cents, or 0.10%, at $39.16 a barrel.
WTI in the $36.45 to $36.95 range has proven to be a “buy zone” since the beginning of September, Axi chief market strategist Stephen Innes said. If the market fell through that, it would be a bearish sign, he said.
Hurricane Zeta’s impact is expected to be short-lived and the return of U.S. production will add to existing oversupply, as Libya rapidly ramps up output after an eight-month blockade.
· Oil major Shell increases dividend as third-quarter earnings beat forecasts
Oil giant Royal Dutch Shell on Thursday reported better-than-expected third-quarter earnings and announced plans to increase its dividend to shareholders.
The Anglo-Dutch company reported adjusted earnings of $955 million for the three months through to the end of September.
That compared with a net profit of $4.77 billion over the same period a year earlier, and adjusted earnings of $638 million for the second quarter of 2020.
Reference: Reuters, CNBC, Yahoo Finance
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