Macro Roundup (Nov 12)

SHANGHAI, Nov 12 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar rose and the safe-haven yen weakened again on Wednesday as the markets continued to adjust to higher interest rates and prospects for economic growth following news on Monday of encouraging results for a coronavirus vaccine.

The euro fell to its lowest level against the dollar in a week as yields on U.S. bonds rise compared with those on European bonds. And, the New Zealand dollar soared to its strongest in a year and a half as traders scaled back bets that the central bank there would move to negative interest rates.

The dollar has started moving up with gains in equities in a switch from its safe-haven status during the COVID-19 crisis when it tended to move in the opposite direction, said Erik Nelson, macro strategist at Wells Fargo Securities.

“This is a huge change from what we've seen over the past few months,” said Nelson. “The increase we've seen in U.S. yields could be a really important inflection point for seeing that equity-dollar relationship to evolve,” Nelson said. “When you look at real or nominal yields, it’s really becoming increasingly attractive to own dollars rather than euros.”

On Wall Street, the S&P 500 and Nasdaq Composite were both higher Wednesday as traders added exposure to tech names hit hard earlier in the week.

Corporate earnings remain a key driver of individual share price action, with German IT house Bechtle jumping 12.6% in early trade on the back of strong third-quarter results.

Dutch bank ABN Amro fell 5.6% after beating profit expectations, but missing net interest income projections and offering cautious forward guidance.

Oil prices rose slightly on Wednesday as hopes of an effective COVID-19 vaccine continued to bolster sentiment and an industry report showed U.S. crude inventories fell more than expected.

Brent crude rose 0.16% to $44.53 a barrel, while U.S. West Texas Intermediate (WTI) crude settled up 9 cents, or 0.2%, to $41.45 a barrel. Both benchmarks gained nearly 3% on Tuesday.

“This week's news about a coronavirus vaccine was encouraging and, alongside short-covering activity, strongly supported oil prices on Monday and Tuesday,” said Giovanni Staunovo, oil analyst for UBS.

The bank cautioned that European lockdowns and restored Libyan oil output could weigh on prices in the short term, but forecast oil at $60 a barrel by the end of 2021 based on the likelihood that producers would continue to rein in supply.

Gold prices fell 1% on Wednesday hurt by a stronger dollar, while optimism around a potential COVID-19 vaccine raised hopes for a quick economic rebound, driving investors towards riskier assets.

Spot gold was down 0.9% at $1,860.61 per ounce. U.S. gold futures fell 0.9% to $1,859.60.

“Gold's got two things working against it, strong equities and a strong dollar at this point. It’s hard for gold to continue to rally given those two markets being up higher,” said Bob Haberkorn, senior market strategist at RJO Futures. “The flight to safety in the precious metals that we had last week after the U.S. elections is gone away on the back of coronavirus vaccine news.”

Germany Consumer Price Index (CPI) for October, US Initial Jobless Claims as of November 7 and US Consumer Price Index (CPI) for October (not seasonally adjusted) will be released today.