DOLLAR SPUTTERS BUT STOCKS GO A TAD HIGHER

The dollar languished and just about everything else rose on Thursday as markets took patchy US economic data as a harbinger of ever more stimulus and brinkmanship on Capitol Hill as a sign that a deal on a new stimulus package is close, Tom Westbrook and Chris Prentice wrote for Reuters on August 6, 2020.

Japan’s Nikkei index was steady and Asian currencies were on the march, with the Australian dollar gaining to around 72 US cents, and the Korean won and Malaysian ringgit touching their strongest since March. S&P 500 futures firmed, oil rose and gold inched back toward a record high hit overnight. 

“If it’s got a pulse, people will buy it now,” said Rob Carnell, Asia-Pacific head of research at ING in Singapore. He said it was clear the global recovery is not a “V-shaped” rebound, but markets are focused almost completely on the help that fiscal and monetary policymakers are providing, even if the next US government package is likely to reduce spending from current levels. 

“Short of apocalyptic news, we are going to see these markets carrying on going up because central banks are printing and printing (money) and it simply has to go somewhere,” Carnell said. Federal Reserve policymakers also encouraged lawmakers to provide more aid. And in any case, plenty is on the way - with a modest selloff in the bond market after the US Treasury flagged borrowing a gigantic $947 billion this quarter, about $270 billion more than it previously estimated. The yield on benchmark 10-year U.S. government debt rose 3 basis points and was steady at 0.5445% on Thursday.