US dollar weakens as gold and silver soar – as it happened

Graeme Wearden

from Economics | The Guardian on 2020-07-22 15:56 (#560MF)

Rolling coverage of the latest economic and financial news

Trade war tensions also hit stocks
US dollar trading at four-month low
Gold highest since 2011; Silver highest since 2014
Euro rallies after Covid-19 recovery deal
Markets fall after Trump's Covid-19 warning

4.56pm BST

And finally, European stock markets have closed in the red.

The FTSE 100 lost 1%, or 62 points, to 6207 points. France's CAC shed 1.3%, with Spain down 1.5%.

Recently, the relationship between the two largest economies in the world has been strained because the Chinese government is eroding Hong Kong's autonomy, and that has attracted the anger of many countries.

Dealers are fearful that today's development could spark a new escalation in tensions. President Trump has an election to contest in a few months, so he might not be overly aggressive with China for that reason.

4.21pm BST

Precious metals miner Fresnillo's shares have soared by 10% today, as it benefits from the jump in gold and silver prices.

Fresnillo maintained its guidance for silver production this year, although it did cut its gold production targets as the pandemic has been disrupting operations at some mines.

Gold is having a tremendous run and although the increase in the price has seen some big rises amongst the Australian Gold juniors , proportionately the UK junior gold stocks have not risen as high or as fast as their Australian cousins.

However, helping to encourage interest in the gold sector generally is the upcoming arrival of Yamana Gold on the LSE, which is well timed for those investors who want exposure to a mid-market player."

3.56pm BST

Back in Europe, European Central Bank chief Christine Lagarde has criticised the EU's new 750bn Covid-19 recovery fund.

Lagarde told an interview with the Washington Post that she'd rather the package provided more grants to struggling countries, with less money for loans:

It could have been better but it's a very ambitious project.

ECB's Lagarde: Reasonable' Mix Of Grants And Loans In EU Deal
- Balance Could Have Been Better, But It Is An Ambitious Package'

What really matters is the symbolism behind the plan, and the precedent it sets: the EU will be borrowing to spend on the basis of need, and will oversee fiscal transfers between member state governments.

For all the pretence that this is a one-off" response to a once-in-a-century catastrophe, the ratchet effect of European integration is exceptionally hard to reverse, and the pressure to repeat the exercise will be enormous as soon as the next crisis hits.

3.19pm BST

Boom! US home sales surged by a fifth in June, new figures show, the biggest rise on record.

Sales of existing homes (ie, excluding new builds) jumped by 21% in June, compared to May, to an annual rate of 4.72m.

Existing Home Sales - big bounceback with 4.72M homes changing hands, however missed expectations of 4.78M and still a lot of work to do to get back to average pic.twitter.com/shRvZntWDS

Sales of Existing Homes (meaning, not newly-built homes) was 21% higher in June compared to May 2020. But the key number to look at is Year Over Year: June is 11.3% lower compared to June 2019.

H/T @DianaOlick https://t.co/XCPLpFqrl2

3.15pm BST

In a contrast to those March days, the US stock market has opened a little higher today.

The Dow Jones industrial average is up 27 points, or 0.1%, at 26,867.

2.50pm BST

Four months after famously warning that hell is coming", billionaire investor Bill Ackman has blasted CNBC for scaring investors with his comments.

Appearing on CNBC again today, Ackman defended his warning back in March that the US was underestimating the severity of the coronavirus crisis, and that Donald Trump shut down for 30 days and close the borders.

I went into lockdown almost a month ago, to save my father's life.

I really blame CNBC.

It took 15 seconds of my interview and then went around scaring people because it was good television... I gave a very bullish message. I said I was buying stocks."

Hold on... Let's be super-clear. I said if we do nothing and we have 18 months of the virus running roughshod across the country, then hell is coming.

My expectation is things don't get meaningfully better until the second half of 2021." Pershing Square's Bill Ackman says the U.S. is having a sloppy reopening" of the country. https://t.co/ALk7PV8ee8 pic.twitter.com/OPUyDrDAaM

"I really blame CNBC. They took 15 seconds of my interview and ran around scaring people because it was good TV ... I gave a very bullish message. I said I was buying stocks," says @BillAckman on his "Hell is coming" comments and why people shouldn't have sold based on it. pic.twitter.com/12H0hepXsA

1.44pm BST

Silver's rally since the March panic is quite remarkable - up around 80%.

That's worthy of a software-as-a-service tech stock, as investor David Schawel jokes:

Can anyone spot when Silver switched to a SaaS model? pic.twitter.com/W52853KgYA

1.43pm BST

The Covid-19 pandemic is set to push Australia into its biggest budget deficit in over 70 years -- as growth stumbles, tax receipts fall and investment is slashed.

1.20pm BST

Manufacturing optimism has risen in Brazil - one of the countries worst hit by the Covid-19 pandemic:

Brazilian industrial confidence jumps in July, posting 3rd monthly rise in a row, says FGV. Confidence index now recouped 74% of the March-April plunge, with firms saying outlook for coming months is brightening pic.twitter.com/J1nUSsMoh6

1.12pm BST

Back in the currency markets, the US dollar is now languishing at a 21-month low against the euro, at $1.158.

But it's scrambling back against the pound, with sterling down 0.2% at $1.27.

The dollar is facing a big test - dollar index is now close to setting a new 21-month low. pic.twitter.com/vNME1E5Men

12.52pm BST

Vaccine news: the US government has secured a $1.95bn deal to buy 100m doses of the Covid-19 vaccine being developed by Pfizer and German biotech firm BioNTech.

They will be distributed freely to American citizens.

BREAKING: The U.S. government taps Pfizer to produce millions of doses of #coronavirus vaccine, available to Americans at no cost $PFE $BNTX pic.twitter.com/L1NGwk42Hd

12.42pm BST

The lockdown DYI boom mentioned earlier extends well beyond the UK.

The strong growth at Kingfisher's UK outlets was matched by a similar pace of growth in France, Romania, Spain and Portugal, while online sales more than tripled in May and June.

11.20am BST

This new spat between Washington and Beijing over China's embassy in Houston has not revived the US dollar.

The dollar is still trading at a four-month low, hit by Covid-19 worries and a flow of funds into the euro.

Several factors are contributing to this downfall, one being that the euro is enjoying a surge in popularity, climbing above the dollar to hit $1.1547 and is likely to start testing the $1.1500 mark more consistently. This rally was bolstered by the news that EU leaders have agreed to a 750bn recovery fund to help the economies most affected by the pandemic.

Sterling has also improved, reaching prices of $1.276 on the growing optimism surrounding the economy.

11.17am BST

Credit rating agency S&P has hailed the EU's Covid-19 rescue fund.

S&P analyst Frank Gill says the decision to borrow collectively to fund the pandemic recovery was an important move, making European government debt safer.

The EU Recovery Fund is positive for European sovereign credit quality and for the institutional effectiveness of all member states, especially those in the euro area."

The story is not over yet, but the establishment of a shared fiscal mechanism is a breakthrough for EU sovereign creditworthiness."

11.10am BST

STOCKS IN EUROPE TUMBLE ACROSS THE CONTINENT IN RISK-OFF TRADE AS US-CHINA TENSIONS RETURN

- STOXX 500.8%
- DAX0.4%
- FTSE 1000.9%
- CAC 401.1%
- FTSE MIB0.5%
- IBEX 351.1%

DOW FUTURES POINT TO A DROP OF 100 POINTS, OR 0.4%, AT THE OPEN$DIA $SPY pic.twitter.com/j4wOB7ssP5

10.54am BST

Renewed tensions between the US and China are also hitting the markets, with Beijing angry that it's being forced to shut its consulate in Houston.

My colleague in Beijing, Lily Kuo, has the details:

The closure of the Chinese consulate in Houston threatens to spart a fresh diplomatic row between China and the US, with Beijing accusing the US of giving it 72 hours to shut the diplomatic mission in a move it described as unprecedented" and an outrageous" escalation.

China said the US told the consulate on 21 July to cease all operations and events, and that Beijing threatened retaliation if the decision was not withdrawn.

STOCKS PREMARKET:
- Dow down 135.40 points
- Nasdaq down 34.00
- S&P down 16.50
Here's what's moving markets Wednesday: https://t.co/Tq6LrfZdzt

10.49am BST

10.35am BST

Stocks in Hong Kong slumped by over 2% today after the City reported a record rise in Covid-19 cases.

Hong Kong reported 113 new coronavirus cases on Wednesday, a daily record, including 105 that were transmitted locally, Reuters reports.

Some kind of lockdown in Hong Kong may happen. The pandemic is not over."

9.57am BST

The pandemic lockdown is sparking renewed interest in DIY.

While we are entering the second half with a favourable trading backdrop, second half visibility remains low given uncertainty around COVID-19 and the wider economic outlook.

9.41am BST

Shares in turnaround specialists Melrose have slumped 15% this morning, after it updated the City on the impact of Covid-19.

Melrose, which took over UK aerospace and automotive giant GKN in 2018, says the last six months were extraordinary'. Revenues slumped by 27%, as its automotive, aerospace and powder metallurgy factories were either shut, or struggling to find work.

For part of this Period the Automotive and Powder Metallurgy businesses had factories that were largely closed in Europe and the Americas, and the Aerospace and Nortek businesses had factories which were largely open but with hugely reduced requirements.

It is also necessary to adapt the businesses for the new economic environment, which means that there has to be an even stronger focus on cost reduction throughout the Group with some inevitable impact on employee numbers.

9.21am BST

After rallying yesterday, equities are on the back foot this morning.

European stock markets have dropped by around 0.7% on average, wiping out Tuesday's rally after EU leaders signed off on the recovery Fund.

It appears that Trump's pivot towards the presidential in an attempt to boost his plummeting approval ratings - urging Americans to wear face masks during a relatively sombre first daily covid-19 press conference since April - has worried investors.

After all, if Trump has now dropped his long-held stance that everything is OK, then it is probably time to REALLY be concerned.

9.08am BST

Marketwatch says the the US dollar is getting punched in the mouth" - having dropped 5.1% in the last quarter.

It's lost 2.3% just in July so far, partly due to a revival in the euro. And there could be wore to come:

The dollar is very vulnerable now," Boris Schlossberg, managing director of G-10 currency strategy at BK Asset Management told MarketWatch in a Tuesday afternoon interview.

Schlossberg said that the massive spending and the general lack of allure of the U.S. dollar could be...more of a threat to the dollar than people appreciate."

8.56am BST

Silver has enjoyed an explosive surge this month.

Silver, which has a lively following among retail investors, can enjoy explosive spurts when conditions are right. Catalysts typically include a pick-up in manufacturing demand and loose monetary policy, which increases its relative attraction as a store of value.

We see both of these factors driving silver higher over the next 6-12 months," said analysts at Citi this week. The bank expects the price to hit $25 an ounce by the middle of next year.

8.38am BST

The price of gold hit $1,865 per ounce for the first time since September 2011 this morning.

The spectre of these stimulus packages has pushed investors back into non-yielding assets like gold,.

The likelihood of interest rates remaining low for the foreseeable future and the weaker U.S. dollar have really boosted investor appetite."

8.12am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The US dollar is taking a pummelling, sending commodity prices rattling higher.

Europe's new stimulus program moved the foundations in foreign exchange markets overnight. The EUR/USD surged to its highest levels since January 2019, to push through the 1.15-handle in overnight trade.

The stronger EUR brought about broad-based weakness in the US Dollar, with the US Dollar Index threatening to retest the lows it recorded in late February.

The overnight session was notable for the renewed energy seen in the great US Dollar rotation trade. The Dollar fell almost everywhere as the tailwinds from the EU pandemic package, and the inspiring news on the Covid-19 vaccine front turned into hurricane-force winds.

Source	RSS or Atom Feed
Feed Location	http://feeds.theguardian.com/theguardian/business/economics/rss
Feed Title	Economics \| The Guardian
Feed Link	https://www.theguardian.com/business/economics
Feed Copyright	Guardian News & Media Limited or its affiliated companies. All rights reserved. 2025