U.S. dollar banknotes.
Liu Jie | Xinhua via Getty
The U.S. dollar began Monday where it left off last week, caught between pressure from worries about the lagging U.S. economic recovery and support from rising U.S. bond yields and safe-harbor demand.
A boost to sentiment from the postponement of the U.S-China trade deal review – which leaves the deal intact – was muted by uncertainty, ahead of a week a week that includes Federal Reserve minutes and the Democrats’ nomination convention.
Against a basket of currencies the dollar traded under gentle pressure at 93.039 on Monday, roughly in the middle of the range it has held since hitting a two-year low at the end of July.
The risk-sensitive Australian dollar inched up to a three-session high of $0.7194, but also remained contained in the channel it has traded in for a week.
The yen was steady at 106.54 per dollar, having dipped last week as a jump in U.S. yields drew Japanese investment to U.S. Treasuries.
The United States and China delayed a Saturday review of their Phase 1 trade deal, people familiar with the plans told Reuters, citing scheduling conflicts.
“That’s good news in the sense that it’s something we can place on the back burner for now,” said National Australia Bank senior foreign exchange strategist Rodrigo Catril.
“But there are other uncertainties coming up that need to be resolved,” he said, pointing to U.S. politics as a presidential election looms, and new virus hot spots in Europe that could challenge the perception that the euro is on an uptrend.
U.S. President Donald Trump also flagged a broadening of his pressure on Chinese tech firms such as e-commerce giant Alibaba Group Holding Ltd.
The yuan, often a barometer of relations between the two countries, was unmoved in offshore trade on Monday morning, and last traded at 6.9364 per dollar.
Elsewhere, in Japan, data showed the world’s third-largest economy suffered its acutest economic contraction on record in the second fiscal quarter as the COVID-19 pandemic crushed business and consumer spending.
New Zealand delayed a general election by a month as it grapples with a new outbreak of the pathogen, while there have been flare-ups in infections in South Korea, Spain and France.
On the horizon, the Democratic national convention in the United States begins on Monday, and is something of a starting gun for the final sprint to the November election. It culminates in a speech from presumptive nominee Joe Biden late on Thursday.
Markets are also on edge ahead of the release of Federal Reserve minutes on Thursday, looking for any hints of a possible change to the central bank’s guidance at its next meeting in September.
Investors are expecting more tolerance in the Fed’s approach to inflation, said Chris Weston, head of research at Melbourne brokerage Pepperstone.
“The bond market is key here and if the Fed can drive down real yields then the dollar will follow, and gold will rally – and vice versa,” he said.
Explainer: Malaysia's political maneuvering, next episode – TheChronicleHerald.ca
KUALA LUMPUR (Reuters) – A year of Malaysian political maneuvering has taken another turn with opposition leader Anwar Ibrahim saying he now has enough support in parliament to be able to form a government and replace Prime Minister Muhyiddin Yassin.
DOES THIS MEAN ANWAR BECOMES PRIME MINISTER?
No. It’s far from certain Anwar will take the position he has tried to get for more than two decades.
Anwar’s first step needs to be convincing the king he has the support of the majority of lawmakers. To do that he would need to see the king, who is currently hospitalised, though not for a serious problem.
The king could make him premier if he is convinced Anwar can command a majority, or he could dissolve parliament and trigger elections on the prime minister’s advice.
So far, no major political party has come out in support of him.
Major parties in Muhyiddin’s coalition dismissed his claim as “cheap publicity” and said they firmly supported the premier.
Anwar’s own party only has 38 lawmakers – which means he would need to win over other parties or factions within them to get majority support from the 222-seat parliament.
HOW DID IT GET TO THIS POINT?
Malaysian politics tumbled into turmoil in February when Anwar’s perennial rival, nonagenarian Prime Minister Mahathir Mohamad resigned in a growing power struggle within their alliance that won a surprise victory in a 2018 election.
Both ended up sidelined while Muhyiddin emerged as prime minister of a government in which the biggest party is the United Malays National Organisation (UMNO) – which ruled Malaysia for decades until 2018 and to which Anwar, Mahathir and Muhyiddin all once belonged.
But Muhyiddin’s position has remained precarious with a single digit majority in parliament, while UMNO withdrew some of its backing after former leader and former Prime Minister Najib Razak was found guilty of corruption in the multi-billion 1MDB scandal.
The opposition, including Anwar and Mahathir, had vowed to oust him, saying he won power by shifting alliances instead of earning it at the ballot box.
HOW DO THE POLITICAL FORCES STACK UP?
Malaysian politics revolves around coalitions, but the strongest single party is likely to be UMNO – which stands for the interests of majority Malays in the multi-ethnic country.
Although it was voted out amid anger over the 1MDB scandal in 2018, it has improved its showing at more recent by-elections. Many Malays were unhappy with what they saw as too much focus on non-Malay interests, and particularly those of ethnic Chinese, under the Mahathir-Anwar coalition. Anwar remains allied to a largely Chinese party.
Kingmakers in any coalition, whether through elections or not, could well be the parties from Sabah and Sarawak on the island of Borneo – who have long asked for more autonomy and a bigger share of oil and gas revenues from state oil giant Petronas.
WHAT DOES THIS MEAN FOR THE ECONOMY?
Malaysia’s economy plunged into its first contraction since the 2009 global financial crisis as a result of the impact of the coronavirus on trade and tourism.
While all governments are likely to promise large stimulus packages, political turmoil could hold up prospects for delivering on them and being able to find the financing for them.
If whoever forms a government is beholden to the Borneo parties, that could also mean that central government revenues take a heavier knock as they could end up getting smaller revenue from Petronas.
Muhyiddin, whose coalition relies on the ruling coalition from Sarawak for support, had already agreed to pay a sales tax they demanded and had shown willing to give them a bigger share of revenues.
(Writing by Matthew Tostevin; Editing by Martin Petty)
In US, Attention to Politics Shows Typical Election Year Surge – Gallup Poll
- Percentage of Americans following news on national politics is back to 2008 high
- Democrats are following national political news more closely than Republicans are
- Older Americans are most likely to follow news on national politics “very closely”
WASHINGTON, D.C. — Less than two months from the presidential election, 42% of Americans say they follow news about national politics “very closely,” similar to the 39% to 43% who paid this close attention in each of the prior three presidential election years since 2008. Today’s level is a bit higher than in 2004, when 36% followed national political news very closely. Attention was far lower in 1996, at 27%.
Line graph. Rate of those following news about elections closely typically rises prior to election. The current rate matches 2008 record high of 42%.
Since 2006, about a third of U.S. adults have closely followed political news in non-election years. That figure ticks up sharply in presidential election years, only to recede the following year. While Americans’ attention didn’t fall much in the first year after President Donald Trump was elected, it did dwindle to 32% by 2019, only to spike 10 percentage points this year.
In addition to the 42% of Americans saying they follow national political news very closely in the Aug. 31-Sept. 13 poll, 38% say they follow it “somewhat closely,” 14% “not too closely” and 6% “not at all.”
Partisans Most Attentive to Political News
Partisan differences in attention to news have not been large in presidential election years, but to the extent there is a difference — as in 2008 and 2012 — Republicans have been the ones more likely to pay close attention. By contrast, today, Democrats are now slightly more likely than Republicans to say they are following news about national politics very closely (51% vs. 45%, respectively).
In line with prior election year polls, independents are significantly less attentive than either major party group, with about a third (34%) saying they are following news on national politics very closely.
Line graph. The percentage of Americans paying very close attention to national political news, by political affiliation. 51% of Democrats now say they are paying very close attention to national political news, compared with 45% of Republicans and 34% of independents. Unlike previous election cycles, Democrats now most likely to say following political news very closely.
Age Disparities in Focus on National Politics
Older Americans are typically more likely than younger adults to say they are following news on national politics very closely. However, unlike their two age cohort comparisons, older Americans are the only age group to be more likely this year (56%) than in 2008 (50%) to say they are following political news very closely.
Adults aged 18 to 34 are the least likely to say they are following news on national politics very closely this year, at 23% — a significantly lower figure than the 32% of 18- to 34-year-olds who said the same in 2008, when the nation witnessed a historic turnout of young voters.
Four in 10 middle-aged Americans (aged 35 to 54) say they are following political news very closely, just shy of the 44% high for this age group that Gallup recorded in 2008.
Line graph. The percentage of Americans paying very close attention to national political news, by age group. 56% of those aged 55 or older now say they are paying very close attention to national political news, compared with 40% of those 35-54 and 23% of those 18-34. As with previous elections, older respondents more likely than younger ones to say following national politics closely.
With just six weeks until the Nov. 3 contest, Americans are relatively focused on national politics, as is typical in presidential election years. Compared with their interest in 2008, a year with record-high voter turnout, Democrats are more attentive today, a finding that could bode well for Joe Biden and Kamala Harris.
When Gallup last measured the amount of thought Americans are giving to the presidential election, Republicans and Democrats were about equal. That situation could have changed since mid-August and the political conventions, but given Republicans’ usual advantage on that measure, a tie between the parties may suggest a stronger Democratic positioning than usual. Gallup will update its “election thought” measure in the coming weeks.
Learn more about how the Gallup Poll Social Series works.
Learn more about public opinion metrics that matter for the 2020 presidential election at Gallup’s 2020 Presidential Election Center.
The one thing that matters to stocks more than politics
The presidential election is mere weeks away on Nov. 3 and the Supreme Court is also now under a microscope after the death of Justice Ruth Bader Ginsburg upset the court’s delicate political balance.
<p class=”canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm” type=”text” content=”All of this has been featured in copious pundit commentary and research notes — especially as the market turmoil that surrounded 2016 proved to be a huge boon for some savvy investors like Carl Icahn, who left a Trump election night celebration to buy stocks and make $1 billion.” data-reactid=”17″>All of this has been featured in copious pundit commentary and research notes — especially as the market turmoil that surrounded 2016 proved to be a huge boon for some savvy investors like Carl Icahn, who left a Trump election night celebration to buy stocks and make $1 billion.
But in a fresh note from Capital Economics, economist Oliver Allen points out the obvious point many forget during election season: the economy is “probably more important than politics.”
<p class=”canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm” type=”text” content=”Politics, Allen writes, is still moving the market. The death of Ginsburg was the “final nail in the coffin” for more fiscal stimulus that millions of Americans need to stay afloat. It also has bearing on what may happen on Election Day, as the Supreme Court may eclipse the pandemic and the economy as key voting issues.” data-reactid=”19″>Politics, Allen writes, is still moving the market. The death of Ginsburg was the “final nail in the coffin” for more fiscal stimulus that millions of Americans need to stay afloat. It also has bearing on what may happen on Election Day, as the Supreme Court may eclipse the pandemic and the economy as key voting issues.
Despite the impact that politics has on the stock market, Allen warns investors not to get ahead of themselves. It’s the economy that matters most, and most importantly, how the long-term coronavirus vaccines and eventual recovery unfold.
Though Allen says to look at the economy more than the election, Capital Economics doesn’t offer more than a vague “the S&P 500 will climb further over the next few years, as major economies eventually get their coronavirus outbreaks under control, and central banks keep monetary policy exceptionally loose,” which seems wise, given how silly 2019 predictions look now.
Many people remember how the disrupted Bush-Gore election in 2000 hurt equity markets, causing them to drop around 8%, but the turbulence cleared up relatively quickly, resulting in no long-term damage.
“Provided any dispute over this year’s election is also eventually resolved, we find it hard to see [the election] having a lasting impact on US equities, even if it could cause a spike in volatility following Election Day,” Allen writes.
The fact that politics is secondary to the economy when it comes to stock prices isn’t a controversial take. Plenty of analysts point to uncertainty as being the chief problem. But the political implications for the stock market are frequently discussed by market strategists.
<p class=”canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm” type=”text” content=”Many financial pundits have said Trump is better for the stock market and economy, citing deregulation and market performance after his election amid dire predictions from some. And Allen notes that “a second term for President Trump would probably be a better outcome for US equities than a win for Joe Biden,” because of corporate taxes.” data-reactid=”36″>Many financial pundits have said Trump is better for the stock market and economy, citing deregulation and market performance after his election amid dire predictions from some. And Allen notes that “a second term for President Trump would probably be a better outcome for US equities than a win for Joe Biden,” because of corporate taxes.
<p class=”canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm” type=”text” content=”At the same time, Trump’s late and weak coronavirus response led, in part, to 200,000 deaths, skyrocketing unemployment, dampened earnings, and a recovery that is still trying to get off the ground. And though some stock prices (mostly tech stocks) are doing well — driving the S&P 500 (^GSPC) back to pre-coronavirus levels after a huge plunge — many companies are still in tough situations.” data-reactid=”37″>At the same time, Trump’s late and weak coronavirus response led, in part, to 200,000 deaths, skyrocketing unemployment, dampened earnings, and a recovery that is still trying to get off the ground. And though some stock prices (mostly tech stocks) are doing well — driving the S&P 500 (^GSPC) back to pre-coronavirus levels after a huge plunge — many companies are still in tough situations.
Source:- Yahoo Canada Finance
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