Macro Roundup (Jul 27)

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

The US dollar index touched a new 22-month low on Friday, while the safe-haven yen rose to its highest in more than four-months, as investors reacted to simmering US-China tensions, a continued rise in coronavirus cases as well as hopes for another US stimulus package.

The greenback posted its biggest weekly decline in almost four months against a basket of currencies and also saw its largest weekly percentage loss against a surging euro since late March.

China on Friday ordered the US to close its consulate in the city of Chengdu, responding to a US demand earlier in the week that China close its Houston consulate.

On Sunday, Treasury Secretary Steven Mnuchin said Republicans had finalized a bill for about $1 trillion in coronavirus relief funds. Mnuchin added he hopes the proposal can find bipartisan support.

On Wall Street, the Dow and S&P 500 each snapped a three-week winning streak last week, as shares of major tech companies struggled and US-China tensions rose. The Nasdaq, meanwhile, posted its first back-to-back weekly losses since May.

Oil prices, however, moved slightly higher on Friday supported by economic data from Europe, even as gains were limited by a flare-up in tensions between Washington and Beijing.

In the US, the oil and gas rig count, an early indicator of future output, fell by two to an all-time low of 251 in the week to July 24, according to data on Friday from energy services firm Baker Hughes Co. However, energy firms added one oil rig in the first weekly increase since March.

Investors, meanwhile, sought safety in the precious metal, lifting gold prices to a new high in a decade on Friday.

Nonferrous metals on the LME pulled back across the board on Friday. Copper plunged 1.6% to lead the losses, tin dropped 1.3%, zinc tumbled 1.2%, lead fell 1%, aluminium slipped 0.6% and nickel shed 0.4%.

Their counterparts on the SHFE traded mixed on Friday night. Tin rose 1.1%, nickel climbed 0.7%, lead inched 0.1% and zinc edged 0.03% higher, while aluminium dipped and copper lost 0.4%.

Flash IHS Markit PMI (purchasing managers’ index) readings on Friday suggested that eurozone business activity rebounded in July, coming in at 54.8 and indicating that economic activity grew for the first time since February.

“Companies across the euro area reported an encouraging start to the third quarter, with output growing at the fastest rate for just over two years in July as lockdowns continued to ease and economies reopened. Demand also showed signs of reviving, helping curb the pace of job losses,” Chris Williamson, chief business economist at IHS Markit which provides the data, said in a statement.

Meanwhile, US business activity increased to a six-month high in July. US companies, however, reported a drop in new orders as new COVID-19 cases spiked across the country.

China will release its industrial profits for June around 9:30 a.m. Beijing time on Monday.

Other economic data slated for release on Monday include Germany’s retail sales data for June and Ifo business climate index for July, as well as US durable goods orders data for June.