Macro Roundup (Jul 23)

SHANGHAI, Jul 23 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar drifted higher against a basket of currencies in choppy trading on Thursday while the euro fell as risk appetite dimmed once again with stocks volatile and investors buying US Treasuries.

Earlier in the session, the greenback slid in the wake of weaker-than-expected US jobless claims data that raised concerns about the world's largest economy's recovery from the pandemic.

The euro, on the other hand, was firmer earlier in the day after the European Central Bank met expectations by pledging to keep interest rates at record lows for even longer.

ECB President Christine Lagarde, in her media briefing, did not say anything to change the market's cautious outlook on the euro zone. She said a fresh wave of the coronavirus pandemic could pose a risk to the region's recovery, although she did offer a more balanced economic outlook.

“The euro/dollar's 30-point pop higher during Christine Lagarde's press conference seemed appropriate in light of some of the dovish narratives coming into the meeting, but the market has now given up this move and is trading back to where it started this morning,” said Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto.

On Wall Street, stock futures edged slightly higher in overnight trading after a rise in technology stocks boosted the Nasdaq Composite to its third-straight positive day on Thursday.

Futures on the Dow Jones Industrial Average gained 52 points, or 0.15%. S&P 500 futures added 0.24% and Nasdaq 100 futures rose 0.33%.

Tech strength continued after hours as shares of social media companies Twitter and Snap each jumped following better-than-expected second-quarter earnings reports.

The major US indexes closed Thursday's regular trading session higher to notch a three-day win streak. The Dow rose 25.35 points, or 0.07%. The S&P 500 climbed 0.2% higher. The tech-heavy Nasdaq Composite led the markets with a 0.36% gain.

All three US stock averages are on pace to close the week in the green for a fourth positive week in five, rebounding from last week's losses and Monday's sharp sell-off.

Oil prices inched up on Thursday, extending gains made in previous sessions on expectations of tighter supplies through 2021 as economies recover from the coronavirus crisis.

Brent crude advanced $1.56, or 2.2%, to settle at $73.79 per barrel, after rising 4.2% in the previous session. US West Texas Intermediate (WTI) crude added $1.61, or 2.3%, to settle at $71.91 per barrel, after gaining 4.6% on Wednesday.

“Some soft spots have emerged in the oil demand recovery, but this is unlikely to change the outlook fundamentally,” Morgan Stanley said in a note.

Members of the Organization of the Petroleum Exporting Countries and other producers including Russia, collectively known as OPEC+, agreed this week on a deal to boost oil supply by 400,000 barrels per day from August to December to cool prices and meet growing demand.

But as demand was still set to outstrip supply in the second half of the year, Morgan Stanley forecast that global benchmark Brent will trade in the mid to high-$70s per barrel for the remainder of 2021.

Gold inched higher on Thursday as stocks and US bond yields pulled back to offset a firmer dollar and restore some of bullion’s allure as a safe haven.

Spot gold had risen 0.1% to $1,804.45 per ounce by 1:33 p.m. ET. US gold futures settled 0.1% higher at $1,805.40.

Benchmark US Treasury yields retreated after hitting a near one-week high and stocks paired initial gains as risk sentiment was curbed by data showing US jobless claims rose unexpectedly to two-month highs, channeling some inflows to bullion.

“Real interest rates are deeply negative, which shows that inflation is running hot, and there;s no chance the US Federal Reserve can make real rates positive short-term, so you have people coming to the realization that you need to own gold,” said Michael Matousek, head trader at US Global Investors.

Gold also took support from a European Central Bank pledge to keep interest rates at record lows for even longer.

Preliminary value of Markit manufacturing PMI in July in the US and euro zone will be released today.