Macro Roundup (Apr 21)

SHANGHAI, Apr 21 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead. 

The US dollar was slightly higher Monday as plunged oil prices weighed on oil-linked currencies and as investors braced for a tough quarter ahead.

Investors also awaited the outcome of a European Union summit this week on how to tackle economic fallout from the coronavirus crisis.

The dollar index, which tracks the greenback against a basket of other currencies, climbed 0.24% and ended at 99.902.

LME base metals closed mixed with nickel as the best performer, advancing 2.64%. Tin added 0.36%, lead climbed 0.36%, while aluminium went flat, copper shed 0.96% and zinc fell 0.31%. 

SHFE nonferrous metals, except for lead, closed higher on Monday, extending gains from last week. Nickel surged 4.4% to be the biggest gainer, aluminium rose 0.7%, copper advanced 0.3%, tin climbed 0.2% and zinc inched up 0.1%. Lead bucked the trend and dropped 1.2%.

US crude oil futures plunged into negative pricing for the first time ever on Monday, as the coronavirus pandemic caused global demand to collapse. 

"Oil is off its lows, but a lot of companies are going to get hit and companies could start to fail," said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.

"If share prices have a pullback, the dollar could see some gains as a safe haven. The only thing that's capping the dollar is the Federal Reserve has done more quantitative easing than anyone else."

Gold edged higher from a more than one-week low hit earlier on Monday, on the back of falling share markets as US crude prices plunged and concerns about the economic damage from the COVID-19 persisted.

China's central bank on Monday lowered its benchmark lending rate for a second time this year in a bid to lower the borrowing costs for businesses and blunt the coronavirus’ economic blow.

The one-year loan prime rate (LPR), mainly influencing business loans, was cut by 20 basis points (bps) to 3.85% from 4.05% previously. The five-year LPR, one of the key reference rates for mortgage lending, was cut by 10 bps to 4.65%.

The cut was the biggest since August 2019 when China revamped the LPR formation mechanism.

Key economic data slated for release today include the eurozone ZEW business climate index for April and the US pending home sales for March.