Macro Roundup (Dec 18)

SHANGHAI, Dec 18 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar fell to its lowest in over two years against major currencies on Thursday after the Federal Reserve stuck to its current policy guns while hopes for more U.S. stimulus and a post-Brexit trade deal boosted appetite for riskier currencies.

Congressional negotiators were closing in on a $900 billion COVID-19 aid bill in the United States, according to lawmakers and aides, boosting stock markets across the globe.

EU Brexit negotiator Michel Barnier reported “good progress” in the talks but cautioned “last stumbling blocks” stood in the way of sealing a new trade pact.

On Wall Street, U.S. stock index futures were modestly lower in overnight trading on Thursday, after the major averages closed at new highs.

Futures contracts tied to the Dow Jones Industrial Average fell 29 points. S&P 500 futures declined 0.06%, while Nasdaq 100 futures slipped 0.07%.

The major averages were coming off a record-setting session, which saw all three indexes close at new highs. During regular trading hours the Dow advanced 148 points for a gain of 0.49%. The S&P 500 and Nasdaq Composite hit both intraday and record closing highs, gaining 0.58% and 0.84%, respectively.

The leg higher came amid optimism around Covid vaccines, as well as the hope that Washington will soon come to a consensus on additional stimulus measures.

On Thursday evening Food and Drug Administration advisors overwhelmingly backed Moderna’s Covid vaccine, a key step towards public distribution approval by the FDA.

Oil climbed on Thursday and touched a nine-month high, with traders optimistic about progress toward a U.S. fiscal stimulus deal and strong Asian demand.

Record-breaking refining demand in China and India lent further strength to the market.

U.S. crude inventories fell by 3.1 million barrels in the week to Dec. 11, the Energy Information Administration said, far more than analysts’ expectations of a 1.9-million-barrel drop.

Gold prices rose over 1% to a one-month peak on Thursday as the dollar spiralled lower on hopes of more coronavirus relief aid and the U.S. Federal Reserve’s pledge to funnel more cash and keep interest rates pinned low.

Lawmakers sought to hammer out a $900 billion COVID-19 aid bill with a Friday deadline to avert a government shutdown looming, buoying gold prices and sending the dollar to a multi year trough. With interest rates anchored at zero, the Fed vowed to keep pumping cash into financial markets until the U.S. economy’s recovery is secure.

US jobless claims unexpectedly rose last week as states reimposed coronavirus restrictions as lawmakers struggle to push through new government aid, according to a Labor Department report Thursday.

The number of first-time unemployment-benefits filers totaled 885,000 in the week ending Dec. 12, the most since the week of Sept. 5. Economists polled by Dow Jones expected initial claims to fall to 808,000.

Initial claims for the previous week were revised higher by 9,000 to 862,000.

U.S. homebuilding and permits increased solidly in November, pointing to sustained housing market strength even as the broader economic recovery is slowing amid a resurgence in new Covid-19 cases and lack of additional government money.

Housing starts rose 1.2% to a seasonally adjusted annual rate of 1.547 million units last month, the Commerce Department said on Thursday. That lifted homebuilding closer to its pace of 1.567 million units in February. Homebuilding surged 12.8% on a year-on-year basis.

In Europe Thursday, the Bank of England kept its main lending rate at 0.1%, having earlier cut twice from 0.75% since the onset of the pandemic in March, and retained its target stock of asset purchases at £895 billion ($1.2 trillion).