Macro Roundup (Jul 21)

SHANGHAI, Jul 21 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The US dollar climbed to a three-month peak on Tuesday in a flight-to-safety bid, as investors remained anxious about a fast-spreading coronavirus variant that could throttle global growth.

Commodity currencies tied to risk appetite such as the Australian, New Zealand and Canadian dollars struggled, with investors opting for safety or staying on the sidelines in the midst of renewed fears about the highly contagious Delta variant, now the dominant coronavirus strain worldwide.

The United States, for instance, has seen a surge in infections, especially in areas where vaccinations have lagged.

The gains in the dollar come at a time when yield differentials have moved against it. Benchmark 10-year US Treasury yields dipped to a five-month low below 1.20% on Monday.

“Many believe the very best of the recovery has already passed us and what is even worse, the medical concern that seemed to be fading away, seems to be returning with a vengeance,” said Juan Perez, FX strategist and trader at Tempus Inc in Washington.

“I believe the safe-haven strengthening is merited, considering that global progress has been anemic to what it appeared like in Q1 so now all valuations and high expectations for growth are being rightly questioned,” he added.

On Wall Street, US stock futures were steady in overnight trading on Tuesday after the major averages clawed back much of their losses from Monday’s sell-off.

Dow futures rose 40 points. S&P 500 futures gained 0.15% and Nasdaq 100 futures rose 0.1%.

Netflix reported disappointing third quarter subscriber guidance after the bell on Tuesday, but the stock was flat in extended trading. The streaming giant said it expects 3.5 million net subscribers in the third quarter, nearly 2 million below analysts’ estimates. The company also reported earnings that missed expectations.

Meanwhile, shares of Chipotle rose 4% in after hours trading as the Mexican fast-food reported quarterly revenue that surpassed pre-pandemic levels as dine-in customers returned to its restaurants.

Crude oil futures rebounded on Tuesday as market participants vied to take advantage of oil's two-month low hit in the previous session.

Monday's selloff, spurred by demand destruction fears amid rising COVID-19 cases, pushed oil about 7% lower and hit other riskier assets. While equities avoided a new selloff on Tuesday, US Treasury and German bond yields also slipped as a reminder that investors remained worried.

“There are bottom pickers trying to get into this dip,” said Bob Yawger, director of energy futures at Mizuho in New York.

Brent crude rose 73 cents, or 1%, to settle at $69.35 per barrel, having slid by 6.8% on Monday. The global benchmark has fallen from over $77 hit in early July - its highest since late 2018.

Tuesday is the final trading day for August US crude futures, adding volatility to the market, Yawger said.

The expiring US crude August settled 1.5% higher at $67.42 per barrel after earlier touching a session low of $65.21. The contract fell 7.5% on Monday.

Gold was subdued in volatile trade on Tuesday as the dollar strengthened, curbing inflows into the safe-haven metal despite some concerns over a surge in COVID-19 cases.

Spot gold was little changed at $1,811.51 per ounce by 1:33 p.m. ET, while US gold futures settled up 0.1% to $1,811.40.

“We’ve seen volatility in gold pick up quite a bit and that has knocked out some of the long positions,” said Bart Melek, head of commodity strategies at TD Securities, also attributing gold's decline to a weaker dollar.

The US dollar scaled a 3-1/2-month high, denting gold's allure.

A surge in coronavirus cases in the United States and other countries however spurred some safe-haven buying of bullion in recent sessions, with gold rebounding as much as 1.7% from Monday's one-week trough.

“A lot of people in the gold market have taken their eyes off the ball this year, but if we get more bad news on the COVID front and equities weaken, you could get just that flight- to-safety buy in a market that can wake up pretty quick,” said Bob Haberkorn, senior market strategist at RJO Futures.

US EIA crude oil inventory change as of July 16 will be released today.