Macro Roundup (Sep 13)

SHANGHAI, Sep 13 (SMM) — This is a roundup of global macroeconomic news last Friday night and what is expected today.

The dollar fell on Friday on improving risk sentiment on news that U.S. President Joe Biden and Chinese leader Xi Jinping spoke for the first time in seven months.

In a statement, the White House said Biden and Xi had “a broad, strategic discussion,” including areas where interests and values converge and diverge. The conversation focused on economic issues, climate change and COVID-19, a senior U.S. official told reporters.

The dollar dipped 0.35% to 6.4265 yuan, nearing a more than two-month low of 6.4233 yuan reached last week.

The Australian dollar gained 0.41% to $0.7397 and the New Zealand dollar rose 0.56% to $0.7145.

The dollar index fell 0.07% to 92.459.

The greenback has fallen from a nine-month high in August as investors wait on new clues on when the Federal Reserve is likely to begin paring its bond purchases and, eventually, raise rates.

On Wall Street, U.S. stock index futures were modestly higher during overnight trading on Sunday as the S&P 500 comes off its longest daily losing streak since February. Fears over slowing economic growth and rising inflation have weighed on the market.

Futures contracts tied to Dow Jones Industrial Average gained 91 points. S&P 500 futures advanced 0.26%, while Nasdaq 100 futures were up 0.24%.

All three major averages finished lower on Friday, with the Dow and S&P posting a fifth straight day of losses, while the Nasdaq Composite registered its third consecutive negative session.

For the week, the Dow and S&P dipped 2.15% and 1.69%, respectively, which was each average’s worst weekly performance since June. The tech-heavy Nasdaq posted its worst week since July, sliding 1.61%.

Oil rose on Friday, supported by growing signs of supply tightness in the United States as a result of Hurricane Ida and as U.S.-China trade hopes gave riskier assets a boost.

About three-quarters of the U.S. Gulf’s offshore oil production, or about 1.4 million barrels per day, has remained halted since late August.

Figures last week showed U.S. crude inventories fell to the lowest since September 2019.

"With the restart in offshore crude production lagging, the odds are that the Ida effect will still be felt in the coming weeks,” said Stephen Brennock of oil broker PVM.

Brent crude rose $1.47, or 2%, to $72.92. U.S. West Texas Intermediate (WTI) crude settled 2.32%, or $1.58, higher at $69.72 per barrel.

Gold edged lower on Friday amid uncertainty over the U.S. Federal Reserve’s tapering timeline that kept most investors on the sidelines, with gains in the dollar this week putting bullion on course to mark its first weekly decline in five.

Spot gold fell 0.2% to $1,790.37 an ounce by 1:46 p.m. EDT, while U.S. gold futures settled 0.4% lower at $1,792.1 an ounce.

Bart Melek, head of commodity strategies at TD Securities, said a bounce in U.S. yields were preventing speculative funds from convincingly moving into gold.

The benchmark U.S. 10-year Treasury yield rose after economic data indicated high inflation could persist for some time. While gold is considered a hedge against inflation, higher yields translate into higher opportunity cost for holding non-interest bearing bullion.

The pan-European Stoxx 600 closed down 0.3%, after having climbed earlier in the day. The benchmark also finished the week in the red, falling 1.2%. Utilities shares led the losses Friday, down 1.3%.

Traders continued to digest the European Central Bank’s decision to slow down bond buying under its pandemic stimulus program.