Macro Roundup (Jul 16)

SHANGHAI, Jul 16 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The US dollar edged higher on Thursday, recovering some of the ground lost in the prior session after the head of the Federal Reserve told Congress he saw no need to rush the shift towards tighter post-pandemic monetary policy.

The dollar index, which measures the greenback against a basket of six currencies, was 0.1% higher at 92.504. The index fell as low as 92.272 earlier in the session.

The index has climbed in recent weeks as investors got more sanguine about the outlook for the greenback, driven by an increasingly upbeat assessment of the US economy by the Federal Reserve, which has brought forward the time frame on when it will next raise rates.

On Wednesday, Fed chair Jerome Powell said he is confident recent price hikes are associated with the country's post-pandemic reopening and will fade, and that the Fed should stay focused on getting as many people back to work as possible.

“There are, off course, differing voices on the FOMC but the Chairman's position seems quite clear; the taper discussion and decision will not occur until late this year,” Shaun Osborne, Chief FX Strategist at Scotiabank, said in a note.

On Wall Street, futures contracts tied to the US stock indexes slipped during the overnight session Thursday evening as Wall Street neared the end of the first major week of second-quarter earnings reports.

Contracts linked to the S&P 500 lost 0.1%, while Dow futures lost 32 points. Nasdaq 100 futures shed less than 0.1%.

The moves in the overnight session came as investors pored over the first batch of second-quarter earnings reports published throughout the week.

Though some of the nation's largest lenders posted healthy profits and revenues amid the economic recovery, the reaction in the stock market has been less than rosy. Morgan Stanley's second-quarter earnings report, for example, topped analysts' expectations Thursday, yet its shares closed just 0.18% higher.

Oil prices fell on Thursday, extending losses as investors braced for increased supplies after a compromise deal between leading OPEC producers and as US fuel stocks rose, raising concerns over demand in the world’s largest consumer.

Brent crude dipped 1.73% to settle at $73.47 per barrel and US West Texas Intermediate (WTI) crude finished 2.02% lower at $71.65 per barrel.

Both benchmarks slid more than 2% on Wednesday after Reuters reported that Saudi Arabia and the United Arab Emirates (UAE) had reached a compromise that should pave the way for a deal to supply more crude to a tight oil market and cool soaring prices.

“The market is not taking any chances. Prices are very overbought anyway, so traders might want to take some money off the table before the deal is concrete,” said Avtar Sandu, senior commodity trader at Phillips Futures in Singapore.

Talks among the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, had broken down this month after the UAE objected to an extension to the group's supply pact beyond April 2022.

Gold hit a one-month peak on Thursday, spurred by US Federal Reserve Chair Jerome Powell’s dovish comments and some concerns over a stalling global economy.

Spot gold rose 0.1% to $1,829.16 per ounce by 1:59 pm ET. US gold futures gained 0.3% to $1,830.00.

Gold prices had hit a one-month peak earlier in the session after Powell said on Wednesday in congressional testimony that the US job market was “still a ways off” from the progress that the central bank wants to see before reducing its support for the economy.

Bob Haberkorn, senior market strategist at RJO Futures, said that gold’s move above $1,800 this week along with concerns over a sell-off in equity markets had driven some safe-haven buying of bullion.

“Globally, there are some spots that are pretty hot with that Delta variant, and China slowing down a bit has sparked concerns about global equity markets, so you're getting some flight to safety into gold and silver.”

Key economic data slated for release today include Eurozone seasonally-unadjusted final value of the CPI annual rate in June, Eurozone seasonally-adjusted trade account in May, monthly retail sales rate in June in the US and the initial value of the University of Michigan consumer confidence index in July.