Macro Roundup (Jan 15)

SHANGHAI, Jan 15 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar drifted lower on Thursday in choppy trading, after Federal Reserve Chair Jerome Powell struck a dovish tone, saying the US central bank is not raising interest rates anytime soon and rejecting suggestions the Fed might start reducing its bond purchases in the near term.

The Fed's asset-buying program to support financial markets in a pandemic has weighed on the dollar, as it increased the supply of the currency and diminished its value.

The dollar, though, had traded higher for most of Thursday's session, in line with a rise in Treasury yields, amid upbeat expectations about President-elect Joe Biden's fiscal stimulus. But it changed direction as Powell spoke.

Powell said the economy remains far from the Fed's goals and he sees no reason to alter its highly accommodative stance “until the job is well and truly done.” The Fed chairman was in a live-streamed interview with a Princeton University professor.

On Wall Street, stock futures were mostly flat on Thursday evening after President-elect Joe Biden announced details of a $1.9 trillion stimulus plan, one of the top agenda items when his administration begins next week.

Contracts tied to the Dow Jones Industrial Average ticked up 25 points, or 0.1%. Those for the S&P 500 and the Nasdaq 100 also gained about 0.1%.

Biden's proposal, called the American Rescue Plan, includes increasing the additional federal unemployment payments to $400 per week and extending them through September, direct payments to many Americans of $1,400, and extending the federal moratoriums on evictions and foreclosures through September.

Oil prices edged higher on Thursday, boosted by a weak dollar and bullish signals from Chinese import data but pressured by renewed worries about global oil demand due to surging coronavirus cases in Europe and new lockdowns in China.

Brent crude oil futures rose 26 cents, or 0.5%, to $56.32 a barrel. U.S. West Texas Intermediate (WTI) settled 66 cents, or 1.25%, higher at $53.57 per barrel.

The US dollar index slumped to session lows after comments from U.S. Federal Reserve Chair Jerome Powell on interest rates.

A weaker greenback makes dollar-denominated oil cheaper for holders of foreign currencies.

Raising hopes of increased oil demand was a hefty US COVID-19 relief package, which President-elect Joe Biden is due to unveil on Thursday.

Gold prices rose on Thursday after comments by U.S. Federal Reserve Chair Jerome Powell cemented hopes around a lower interest rate environment, while prospects of more US stimulus further lifted bullion's appeal as an inflation hedge.

Spot gold rose as much as 0.8% following Powell's comments and was up 0.3% at $1,848.22 per ounce. U.S. gold futures settled 0.2% lower at $1,851.40 per ounce.

Powell said an interest rate hike is coming “no time soon” and pushed back against suggestions that the central bank might start tapering its bond purchases any time soon.

“Powell pretty much confirmed the bank's dovish stance. ... You're going to see that the Fed is going to remain ultra-accommodative and that's why gold prices are rising,” said Edward Moya, senior market analyst at OANDA.

Here's a look at what's on tap:

Euro zone: seasonally-adjusted Balance of trade in November

US: December Retail Sale, December PPI annual rate, Industrial Production Index for December, and the preliminary University of Michigan Consumer Sentiment Index in January