The Financial Daily : 2020-09-17

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Thursday September 17, 2020 US dollar skids to two- week low vs yen as Fed looms NEW YORK: The dollar dropped to a two- week low against the yen on Tuesday on expectatio­ns the Federal Reserve will maintain its downbeat stance on the U. S. economy as it grapples with the COVID- 19 pandemic, and keep U. S. interest rates near zero for some time. The Fed begins a two- day meeting on Tuesday and analysts expect the U. S. central bank to affirm its current zero- interest- rate policy over the next three years, a view that could further weigh on the dollar. Analysts do not expect a rate hike view from the Fed on Wednesday, but if it does happen, that could be a positive for the dollar. "The big story for tomorrow would be a 2023 rate hike on the dots," said Greg Anderson, global head of FX strategy at BMO Capital Markets in New York. "What we'd hope to see is that the Fed projects no rate hikes for 2023. If they put a rate hike in there, equities and commoditie­s would sell off and the dollar would rally," he added. In afternoon trading, the dollar fell 0.3% against the yen JPY= EBS to 105.46, after earlier sliding to a twoweek low of 105.30 yen. A break below 105.20 yen could pave the way for further technical selling, analysts said. "The U. S. central bank will be wary of uncertaint­y the U. S. presidenti­al election will bring with it and would- n't want to cause unnecessar­y turmoil in the financial markets," said Fawad Razaqzada, market analyst, at ThinkMarke­ts. com in London. The dollar index was little changed at 93.062 = USD, as the greenback recovered somewhat after the euro reversed earlier gains. The euro was last down 0.1% at $ 1.1851 EUR= EBS. Earlier, the euro gained after the ZEW economic sentiment survey showed investor sentiment in Germany rose in September, despite headwinds from Brexit and rising coronaviru­s infections. The euro along with commodityl­inked currencies such the Australian AUD= D3 and New Zealand dollars NZD= D3 gained after Chinese data overnight. China's industrial output accelerate­d and retail sales grew for the first time this year, beating analysts' forecasts. That pushed the Chinese yuan to its highest since May 2019 against the dollar CNH= EBS, which was last down 0.4% at 6.779 yuan in the offshore market. U. S. equities also rallied, as risk appetite gained ground.[. N] "What's driving both equities and the dollar is a combinatio­n of ample liquidity provision by the Fed and part of it is rising optimism for a vaccine and the global recovery," said BMO's Anderson. positive US to remove tariffs on Canadian aluminum, Ottawa drops threat of retaliatio­n Pound near two- month lows on Brexit worries; Bank of England eyed EU parliament votes to allow some gas projects to get green transition money BRUSSELS: The European Parliament on Tuesday voted to allow some gas projects to get support from the European Union's flagship green transition fund, teeing up tough talks with the EU Commission and national goverments, which have already agreed to exclude the fuel. The EU wants to l aunch a multi- billion- euro Just Transition Fund, using cash from the bloc's coronaviru­s recovery fund and budget, to help fossil fuel dependent regions shift to cleaner industries. The money aims to push countries towards EU goals t o reach net zero emissions by 2050, and a new, tougher 2030 emissions- cutting target, which the EU Commission will propose this week. But rules to decide who gets the money need to be finalised by the European Parliament, Commission and national goverments. The parliament will formally approve its position with another vote on Wednesday folowing the vote to support an amendment to allow some gas projects to receive the money. Its stance i s at odds with that of the Commission and national government­s, who must approval the final rules for the Fund, and have already said it should be off limits to all fossil fuels. Gas emits roughly 50% less CO2 than coal when burned in power plants, but it is also associated with leaks of methane, a potent planet- warming greenhouse gas. The divisions highlight the tough task facing the EU - which, having pledged ambitious climate action, must agree how to make that happen across its 27 member states. WASHINGTON/ OTTAWA: The Trump administra­tion said on Tuesday it will remove 10% U. S. tariffs on raw Canadian aluminum as long as imports of t he metal stay below levels that are expected to "normalize" over the next four months. In response, Canada dropped a threat to impose billions of dollars of retalia tory sanctions, marking the end of a spat between the major trading partners. The U. S. Trade Representa­tive's office said the decision came after consultati­ons with Ottawa determined that aluminum imports during the SeptemberD­ecember period of 2020 were expected to fall 50% from the January- July period. U. S. Presi dent Donald Trump had reimposed a 10% t ariff on non- alloyed, unwrought aluminum from Canada i n August after a surge in imports across the northern U. S. border. Canadian Trade Minister Mary Ng said the U. S. announceme­nt marked an end to an "incredibly difficult" few months for domestic producers. "Canada has not conceded anything. We fully retain our right to impose our countermea­sures if the U. S. administra­tion decides to reimpose its tariffs on Canadian aluminum products, and we are prepared to do so," she told a news conference in Ottawa USTR said that i t now expected raw aluminum imports from Canada to be 70,00 0 t o 83,000 t o ns pe r month through December. If it is determined that in any month imports exceed 105% of t hose l evel s, USTR s ai d i t will retroactiv­ely impose the 10% tariffs on all shipments for that month. Canada has always rejected the idea of quotas on alum in um exports. When que stio ned about t he U. S. l evels , Deputy Prime Ministe r Chrystia Freeland said: "This is not a negotiated deal ... we have not negotiated an agreement with the United States on quotas". Rio Tinto Aluminum RIO. L Chief Executive Alf Barrios said t he U. S. move was "a positive step that ensures the North American aluminum supply chain remains strong in the face of challengin­g global conditions." LONDON: The British pound held within striking distance of a two- month low on Wednesday before a Bank of England decision on Thursday against the backdrop of a darkening outlook for the economy. While the central bank is widely expected to hold fire, policymake­rs are likely to conclude that downside risks to the economy are rising for the economy due to ri si ng Brexit uncertaint­y and renewed restrictio­ns on social activity. Geoffrey Yu, senior EMEA market strategist at BNY Mellon said the central bank will now have to contend with Brexit and fiscal uncertaint­y and the pound's recent spell of weakness is warranted. "A lack of a trade deal after the Brexit transition period is complete will certainly change the BoE's conditiona­l assumption­s on monetary policy," he said in a note to clients. Sterling had its worst week in six months last week, as investors grew more pessimisti­c about the chances of a Brexit deal being reached before the December 2020 deadline. After throwing Brexit trade talks into disarray by proposing legislatio­n that would break internatio­nal law by breaching parts of the Withdrawal Agreement, Prime Minister Boris Johnson faces a rebellion from his own lawmakers as the proposed bill, called the Internal Markets Bill, moves through parliament this week. The pound was 0.1% lower at $ 1.2877 in early London trading, not far from a late July low of $ 1.2768 hit last week. Against the euro, the pound slipped 0.1% to 92.01 pence. Economic concerns also weighed after Tuesday's data showed Britain's unemployme­nt rate rising for the first time since the coronaviru­s lockdown began in March. That prompted investors to ratchet up expectatio­ns that the pound is likely to remain volatile in the coming weeks with one- month volatility gauges trading higher than their one- year counterpar­t on Wednesday. Gold up ahead of Fed policy decision China lets traders push yuan toward best quarter on record LONDON: Gold was up on Wednesday morning i n Asia ahead of the U. S. Federal Reserve's policy decisi on, due t o be handed down later in the day. The focus will be on whether the Fed continues to maintain an accommodat­ive approach to inflation and keep interest rates lower for longer, both policies announced at August's Jackson Hole symposium by Fed Chairman Jerome Powell. Gold futures edged up 0.11% to $ 1,968.30 by 12: 35 AM ET ( 5: 35 AM GMT) i n Asian morning trade. The dollar rose during the previous session after a recent weak spell, buoyed by expectatio­ns that today's Federal Reserve meeting will pursue a policy of keeping interest rates low and controllin­g inflation. The greenback's fall on Wednesday helped gold pull back some of its lost territory. Other ac t ors i nf l uencing t he preci ous metal's price include t he U. S. Democrats pushing to delay the U. S. Congress' October recess in order to establish a new COVID- 19 aid bill and U. S. President Donald Trump declaring that a COVID- 19 vaccine would be ready in a few weeks, though his pronouncem­ent was received with a certain amount of skepticism. A WTO ruling that the U. S. breached internatio­nal trade regulation­s when applying tariffs to over $ 234 billion in Chinese goods has BIEJING: China's policy makers are in no rush to rein in a rapid advance in the yuan, as traders push the currency toward its largest quarterly rally on record. The yuan has strengthen­ed 4.2% since the end of June to 6.772 per dollar, set for the biggest ever quarterly gain in Bloomberg data going back to 1981. The currency is the best performer in Asia in the third quarter, with the buying momentum being close to the strongest since January. The yuan is being supported by a slump in the dollar, while Chinese media has been attributin­g the gains to the nation's economic recovery. The central bank has also helped by not standing in its way, which for some in the market is an incentive for the currency to push higher. Beijing's daily fixings have tracked the spot rate, and officials have not expressed any concern over the currency's strength. "There is scope for further yuan gains before the authoritie­s start to become con- cerned about excessive strength," said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd., adding that a lack of pushback from Beijing has encouraged him to become more bullish. "It is very likely for the yuan to hit 6.7 in the near term." Beijing's apparent blessing of the rally is a far cry from a few years ago, when the People's Bank of China sought to rein in gains for fears that it would hurt exporters. What's different now is the country has changed its strategy for boosting growth. It's now more focused on cheapening imports and bolstering domestic consumptio­n, and a stronger currency could help achieve that. This doesn't mean the PBOC will allow the yuan to gain too fast. One indicator traders follow is the Bloomberg CFETS RMB Index Tracker, which measures the currency against 24 peers. While it shows the yuan has climbed 2.2% this quarter, it is still well off this year's peak in March. raised the possibilit­y of i ncreased U. S.- China trade tensions, bringing further hesitation into the global marketplac­e. The looming U. S. presidenti­al election and it s uncertain outcome are als o matters of concern to investors. Brent oil futures have climbed back to over $ 40 per barrel after a much larger U. S. crude inventory draw than forecast, this was after it earlier fell to its lowest price since June. However, both gl obal oversupply and low global demand are still dogging t he market, giving gold a slight boost. COVID- 19' s ongoing global spread i s creating the usual currents of uncertaint­y in t he market, though recent news on vaccine progressio­n has sli ghtly still ed the waters. Gold, a safe- haven popular during times of social and economic uncertaint­y, has seen substant ial price increases since the onset of t he COVID- 19 pandemic with prices topping out above $ 2,072 i n August. Daily opening & closing rates Metals, Energy, COTS/ FX and US Indices On Monday, The traded value of Metals, Energy, COTS/ FX and i ndices was recorded at PKR 6.760 billion and t he number of lots traded was 9,174. Major business was contribute­d by Gold amounting to PKR 3.352 bi ll i on, f ol l owed by NSDQ 100 ( PK R 976.653 million), Currencies through COTS ( PKR 551.709 million), Natural Gas ( PKR 461.737 million), Silver ( PKR 402.784 million), Copper ( PKR 382.124 million), DJ ( PKR 343.679 million), Crude Oil ( PKR 153.977 million), SP500 ( PKR 74.222 million) and Platinum ( PKR 60.968 million). In agricultur­e commoditie­s one lot of Wheat amounting to PKR 4.499 million and 8 l ots of Cotton valued at PKR 4.404 million were traded. PMEX Index 5,038 Total Volume ( Lots): 9,174 Traded Value ( Rs): 6,760,533,635 Commodity Price Quotation Open Close Commodity Price Quotation Open Close GOLDEURJPY ( COTS) GOLDGBPJPY ( COTS) GOLDCHFJPY ( COTS) GOLDAUDJPY ( COTS) GOLDEURCAD ( COTS) GOLDEURAUD ( COTS) GOLDEURCHF ( COTS) GOLDGBPCHF ( COTS) GOLDAUDCAD ( COTS) DJ NSDQ100 SP500 JPYEQTY ICOTTON ICORN IWHEAT ISOYBEAN JPY ¥ JPY ¥ JPY ¥ JPY ¥ CAD$ AUD$ CHF CHF CAD$ Index Value Index Value Index Value Index Value US Cents per pound US Cents per bushel US Cents per bushel US Cents per bushel 125.664 135.812 116.671 77.226 1.5620 1.627 1.0770 1.164 0.9600 27619 11,061.25 3335.25 23255 65.21 365.25 540.75 991.5 125.394 135.823 116.361 77.042 1.5640 1.6280 1.0780 1.1670 0.9610 27977 11,275.00 3380.50 23355 66.51 368.25 544.25 1,000.50 WTI CRUDE OIL BRENT CRUDE OIL NATURAL GAS SILVER GOLD GOLD MTOLAGOLD TOLAGOLD PLATINUM COPPER PALLADIUM GOLDEURUSD ( COTS) GOLDGBPUSD ( COTS) GOLDUSDJPY ( COTS) GOLDAUDUSD ( COTS) GOLDUSDCAD ( COTS) GOLDUSDCHF ( COTS) GOLDEURGBP ( COTS) $ Per Barrel $ Per Barrel US $ Per mmbtu $ Per Ounce $ Per Ounce Rs Per 10 gms Rs Per Tola Rs Per Tola $ Per Ounce US $ per pound $ Per Ounce US$ US$ JPY ¥ US$ CAD$ CHF GBP 37.30 39.76 2.256 26.940 1,949.6 103,909 117,819 117,819 933.4 3.043 2,335.3 1.1840 1.2800 106.101 0.7280 1.3190 0.9090 0.9250 37.32 39.67 2.305 27.435 1,967.3 104,658 118,941 118,941 963.4 3.066 2,326.9 1.1860 1.2850 105.704 0.7290 1.3180 0.9080 0.9230 PRINTED AND DISTRIBUTE­D BY PRESSREADE­R PressReade­r. com + 1 604 278 4604 O R I G I N A L C O P Y . 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