Macro Roundup (Jan 28)

SHANGHAI, Jan 28 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar edged higher against a basket of currencies on Wednesday after the Federal Reserve left interest rates near zero.

The dollar index ticked up 0.51% to 90.61 on Wednesday, following a 0.2% decline the previous session.

The dollar reversed declines against riskier currencies, even as pandemic recovery hopes got a boost from the International Monetary Fund’s upgrading its forecast for 2021 global growth.

Treasury yields, whose rise had supported the dollar at the start of this year, declined overnight amid caution about the eventual size of and delays to President Joe Biden’s $1.9 trillion fiscal stimulus plan.

“While the Fed had been consistent for the past few months that the balance of risks was still to the downside, we could see a more neutral stance being taken,” said John Velis, FX and macro strategist at BNY Mellon.

“This would be seen as a marginally hawkish turn on the Committee, but we think that the Chair will make it quite clear that neither interest rate rises nor any quantified timeline for tapering bond purchases is under consideration.”

On Wall Street, stock futures fell in overnight trading on Wednesday as the market is poised to extend a sharp sell-off amid concerns about heightened speculative trading.

Futures on the Dow Jones Industrial Average traded 120 points lower. S&P 500 futures dipped 0.7% and Nasdaq 100 futures fell 0.8%.

Apple turned in its largest revenue on record at $111.4 billion in its fiscal first-quarter earnings report for fiscal 2021. Sales for every product category rose by double-digit percentage points. Shares of the tech giant dipped 3%, however.

Tesla dropped more than 3% in extended trading after the electric car maker posted worse-than-expected earnings for the latest quarter. The company also said it expects annual average delivery growth of 50% going forward.

Wall Street suffered steep losses on Wednesday, with the S&P 500 and the Dow posting their worst day since October, as the speculative buying frenzy in heavily shorted stocks kept investors on edge. Some fear that hedge funds being squeezed could be forced to reduce their equity holdings to raise cash.

Oil prices ticked up on Wednesday as a massive drawdown in U.S. crude inventories countered persistent concerns about the coronavirus pandemic continuing to hurt fuel demand.

U.S. crude oil stocks dropped by nearly 10 million barrels last week to their lowest since March at 476.7 million barrels due to a sharp drop in imports, the Energy Information Administration said, compared with analysts’ expectations in a poll for a build.

Stocks at the U.S. storage hub and delivery point for crude futures in Cushing, Oklahoma, plunged by 2.3 million barrels.

Brent crude gained 34 cents to $56.25 a barrel. U.S. West Texas Intermediate (WTI) crude settled 24 cents, or 0.5%, higher at $52.85 per barrel.

“The market was led up by a significant draw in crude oil,” said Andrew Lipow, president Lipow Oil Associates in Houston.

Gold prices fell to a more than one-week low on Wednesday, pressured by concerns over the U.S. stimulus bill and strength in the dollar after the Federal Reserve left interest rates unchanged.

Spot gold fell 0.36% to $1,844.61 per ounce, having earlier touched its lowest since Jan. 18. U.S. gold futures settled down 0.6% at $1,844.90.

The dollar rebounded to a more than one-week high against rivals, making gold costlier for investors holding other currencies.

“The $1.9 trillion (U.S. stimulus) was pretty ambitious and I don’t think (President) Biden has the support to pass it,” Haberkorn added. “That is another reason why gold is not trying to get back above $1,900.” The Biden administration’s stimulus plan faced strong opposition from Republicans over the size of the package.

Consistent with market expectations, the policymaking Federal Open Market Committee said Wednesday it was keeping its benchmark short-term borrowing rate anchored near zero and maintaining an asset purchasing program that is seeing the Fed buy at least $120 billion a month.

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

Germany: preliminary CPI monthly rate for January

Euro zone: industrial prosperity index for January, final value of consumer confidence index for January, the Legatum Prosperity Index for January

US: Initial Jobless Claims as of January 23, preliminary annualised quarterly rate of real GDP in the fourth quarter, preliminary quarterly rate of actual personal consumption expenditure in the fourth quarter, preliminary annual rate of core PCE price index in the fourth quarter, total sales of new houses for December (10,000 households)