Macro Roundup (Oct 13)

SHANGHAI, Oct 13 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar index held near three-week lows on Monday as optimism over the possibility of a COVID-19 relief bill was curbed by concern over the pandemic while China’s yuan fell after the People’s Bank of China (PBOC) changed its reserve requirements policy.

On Sunday, the Trump administration called on Congress to pass a stripped-down coronavirus relief bill using leftover funds from an expired small-business loan program, as negotiations on a broader package continue to run into roadblocks.

The offshore yuan fell 0.8% against the dollar after China’s central bank said on Saturday it would lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading, a move seen as a bid to curb recent yuan appreciation.

The yuan had reached a more than 17-month high on Friday in offshore trade and has gained nearly 8% against the dollar since late May. But on Monday the offshore yuan was on track for its biggest daily decline against the dollar since March.

Oil prices fell about 3% on Monday as force majeure at Libya’s largest oilfield was lifted, a Norwegian strike affecting production ended and US producers began restoring output after Hurricane Delta.

Gold prices fell from a three-week peak on Monday as expectations of an inadequate US coronavirus relief bill dented the appeal of bullion, which is used as a hedge against likely inflation.

Investors were also keeping a close eye on the upcoming US election due in a couple of weeks, where Democrat Joe Biden is seen as more likely to win.

“Gold will be higher if Biden wins because he will spend a lot of money,” said Bob Haberkorn, senior market strategist at RJO Futures, adding any unknowns on the election night will also provide support.

US stock futures fell slightly in overnight trading on Tuesday as investors awaited the first batch of corporate earnings and updates on a stimulus package.

Dow futures fell 90 points. S&P 500 futures lost 0.05% and Nasdaq 100 futures dropped 0.05%.

Third-quarter earnings season kicks off on Tuesday with several major banks slated to report their results, including JPMorgan Chase, Citigroup and Delta Air Lines. Third quarter results are expected to decline significantly; however, traders are hoping for surprise to the upside.

On the coronavirus front, the pandemic continues to cause widespread concern in Europe with governments resorting to localized lockdowns to stem the spread of the virus. Spain’s government has caused controversy after it imposed a state of emergency on Madrid and the UK government announced a three-tier system of local restrictions for England on Monday.

Chinese trade figures for September are expected to be released on Tuesday.