Macro Roundup (Jul 27)

SHANGHAI, Jul 27 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar edged lower on Monday against a basket of peer currencies as investors positioned themselves ahead of this week’s US Federal Reserve policy meeting, while cryptocurrency prices rose to their highest in weeks.

The dollar index was down 0.261% at 92.654 at 3:00 p.m. ET, under pressure from the euro and yen, but was still close to last week’s 3-1/2-month high of 93.194.

The euro ticked 0.27% higher to $1.1800, even after a survey from the Ifo Institute showed German business morale fell unexpectedly in July on continuing supply chain worries and rising COVID-19 infections.

Short positions in euro-dollar had been accumulating since the last Federal Open Market Committee (FOMC) meeting, but “the downside simply isn’t working,” said Erik Bregar, head of FX strategy at the Exchange Bank of Canada.

The Fed begins a two-day meeting on Tuesday, followed by a news conference by Chair Jerome Powell on Wednesday, where investors will by listening for any comments on when tapering of the central bank’s asset purchases could begin.

On Wall Street, stock futures were flat in overnight trading Monday ahead of quarterly earnings reports from several mega-cap technology companies.

Futures on the Dow Jones Industrial Average added 7 points, or 0.02%. S&P 500 futures and Nasdaq 100 futures traded near the flatline.

Shares of Tesla rose after hours Monday following a better-than-expected second-quarter earnings report. The electric vehicle maker passed $1 billion in quarterly net income for the first time.

The major US stock averages closed Monday’s regular session at record highs to each notch five-day win streaks. The Dow gained 82.76 points, or 0.24%. The S&P 500 also added 0.24% and the tech-heavy Nasdaq Composite closed 0.03% higher.

Second-quarter earnings season continues with Google-parent Alphabet, Microsoft and Apple set to report after the bell Tuesday.

Oil prices were steady on Monday as the spread of the COVID-19 Delta variant stoked fears over future fuel demand, though crude supply looks set to be tight through the rest of the year.

Brent crude futures for September were up 18 cents at $74.28 a barrel, while US Texas Intermediate crude gained 5 cents to trade at $72.12 per barrel.

Both benchmarks fell by more than $1 a barrel in earlier trading.

Coronavirus cases continued to rise over the weekend, with some countries reporting record daily increases and extending lockdown measures that could slow oil demand. China, the world’s largest crude importer, has also registered a rise in COVID-19 cases.

Furthermore, Beijing’s crackdown on the misuse of import quotas combined with the impact of high crude prices could send growth in China’s oil imports to its slowest in two decades this year despite an expected rise in refining rates in the second half.

Gold edged lower on Monday as investors turned cautious in the run-up to a Federal Reserve policy meeting, overshadowing some support from a weaker dollar.

Spot gold was down 0.2% at $1,798.41 per ounce by 1:56 p.m. ET, while US gold futures settled 0.1% lower at $1,799.20.

The US central bank will begin its two-day policy meeting on Tuesday.

“The concern now is that we will get the first hints of not necessarily a rate increase but what kind of reductions the Fed envisions to its balance sheet, and that could be a trigger for rates to move higher,” said Edward Meir, analyst with ED&F Man Capital Markets.

Meir, however, said that was unlikely to drive a sustained fall in gold, with the metal drawing support from a dovish European Central Bank, a currently accommodative Fed, large fiscal stimulus and higher inflation.

Both the ECB and Fed have suggested they will keep monetary policy accommodative for some time.

German business sentiment fell unexpectedly in July, the Ifo Institute’s monthly survey showed Monday, as supply chain constraints and rising Covid-19 infections dampened recent optimism.