Macro Roundup (Jan 22)

SHANGHAI, Jan 22 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar fell for a third straight session on Thursday, with investors seeking out higher-yielding currencies, as a slew of better-than-expected US data and continued optimism about a massive stimulus package spurred hopes of a recovery in the world's largest economy.

The euro, on the other hand, gained versus an overall weak dollar, even as European Central Bank President Christine Lagarde warned about a renewed surge in COVID-19 infections and the prospect of prolonged restrictions that could challenge the region's economic outlook.

The ECB, which kept interest rates steady on Thursday, also pledged to provide more support for the economy if needed.

The FX market showed little reaction to Lagarde's comments, as market participants continued to focus on what seemed like an improving global economic outlook and a nearly $2 trillion U.S stimulus package proposed by new Democratic President Joe Biden’s administration.

On Thursday, US data showed an economy slowly getting some traction, with slightly better-than-expected initial jobless claims, upbeat housing starts data, and a higher factory index for the mid-Atlantic region.

On Wall Street, contracts tied to the major U.S. stock indexes slipped Thursday evening as Wall Street appeared headed to close out the record-setting week on a muted note.

Dow futures lost 34 points while S&P 500 futures ticked just below the flatline. Nasdaq-100 futures fell 11.75 points, or about 0.1%.

The after-hours moves came after a strong showing from the Nasdaq Composite earlier in the day during the regular session.

The index rose to another record as investors set bets for strong tech earnings next week. The tech-heavy benchmark climbed 0.6% to close at a new high in large part thanks to a 3.7% pop in Apple shares.

The Dow Jones Industrial Average and S&P 500 both had more muted sessions, with the former dipping 12 points and the latter up less than 0.1% to eke out another fresh high.

Oil prices slipped on Thursday after industry data showed a surprise increase in U.S. crude inventories that revived pandemic-related fuel demand concerns, while U.S. stimulus hopes buoyed prices.

Brent crude futures fell 3 cents to $56.05 a barrel. U.S. West Texas Intermediate (WTI) crude futures settled 18 cents, or 0.3%, lower at $53.13 per barrel.

Both benchmarks rose over the past two days on expectations of massive COVID-19 relief spending under new U.S. President Joe Biden.

Late Wednesday, industry data showed U.S. crude oil inventories rose 2.6 million barrels last week, compared with analysts’ forecasts in a poll for a 1.2 million-barrel draw.

Official inventory data has been delayed by two days to Friday due to the Martin Luther King Jr. holiday and Inauguration Day.

Gold prices eased from a two-week high on Thursday as investors booked some profit following a rally in the previous session, while expectations for further stimulus and a weaker U.S. dollar limited losses.

Spot gold was down 0.2% to $1,867.56 per ounce at 01:57 p.m. EST (1857 GMT), after hitting its highest since Jan. 8 at $1,874.86 earlier in the day. Bullion had gained 1.7% on Wednesday.

US gold futures settled little changed at $1,865.90 per ounce.

“It is nothing more than some simple profit taking after the recent rally prompted by expectations for further stimulus coming from the Biden (administration),” said David Meger, director of metals trading at High Ridge Futures.

“However, the prospect of further stimulus along with a weaker dollar continues to support gold in the bigger picture perspective.”

Joe Biden was sworn in as the president of the US on Wednesday, with markets focusing on his proposed $1.9 trillion dollar coronavirus stimulus package, which will require approval from a divided Congress.

Key economic data slated for release today include Germany preliminary Markit manufacturing PMI in January, Euro Zone preliminary Markit manufacturing PMI in January, US preliminary Markit manufacturing PMI in January and US Existing Home Sales in December.