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Dollar holds gains as uncertainty weighs on market sentiment

Dollar holds gains as uncertainty weighs on market sentiment

TOKYO (Reuters) – The U.S. dollar held on to gains against most currencies on Wednesday as renewed questions about a coronavirus vaccine and lack of an agreement on additional U.S. fiscal stimulus prompted a shift to safer assets.

FILE PHOTO: U.S. dollar notes are seen in this picture illustration taken at the Bank of Taiwan in Taipei November 11, 2010. REUTERS/Nicky Loh

The yuan was little changed versus the dollar after the central bank’s daily fixing of the yuan’s mid-point was largely in line with estimates, suggesting authorities have paused their attempts to rein in the currency.

The euro and British pound are likely to extend declines, analysts said, as a return of restrictions on economic activity in Europe and Britain to battle a second wave of coronavirus infections unnerves investors.

Currency moves, however, are likely to be subdued as the U.S. presidential election looms on Nov. 3, but analysts said sentiment is leaning against riskier bets, which should support the dollar in the coming days.

“Many factors are pointing to more upside for the dollar,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“U.S. stimulus may not come until after the election. The People’s Bank of China is halting the yuan’s rise. There’s no reason to buy the euro, and there are a lot of euro longs that need to be unwound.”

The dollar last stood at $1.1744 per euro EUR=D3, holding on to a 0.6% gain from the previous session.

The pound GBP=D3 traded at $1.2932, nursing a 1% loss from Tuesday.

Sterling also took a hit due to worries about little progress in trade talks between Britain and the European Union and the chance the Bank of England will adopt negative interest rates.

Risk appetite has weakened after Johnson & Johnson JNJ.N said on Tuesday

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Indonesia holds rates, stresses QE for economic support

Indonesia holds rates, stresses QE for economic support

By Gayatri Suroyo and Fransiska Nangoy

JAKARTA, Oct 13 (Reuters)Indonesia’s central bank kept interest rates steady on Tuesday, holding fire for a third straight meeting to avoid adding pressure to a falling rupiah but reiterated its pledge to use quantitative easing measures to support the economy.

Bank Indonesia (BI) kept the 7-day reverse repurchase rate IDCBRR=ECI at 4.00%, as expected in a Reuters poll, after delivering 100 basis points of rate cuts so far this year.

Southeast Asia’s largest economy is headed for its first recession in over two decades with the coronavirus outbreak still raging in the country with the largest COVID-19 death toll in the region.

“We see that (quantitative easing measures) are more effective to support the national economy,” Governor Perry Warjiyo said in a streamed news briefing, underlining that BI has injected 667.6 trillion rupiah ($45.45 billion) of fresh liquidity to fight the pandemic’s impact.

BI has also cut interest rates four times this year, cut required reserves and loosened lending rules to fight the economic fallout from the coronavirus pandemic.

It has made direct purchases of government bonds to fund President Joko Widodo’s relief programmes and is expected to remain a standby buyer in the local-currency sovereign bond market in 2021.

Governor Perry Warjiyo said during the briefing an increase in government spending, including for infrastructure projects, and improvement in exports should prop up the economy, even when private consumption remained weak.

The rupiah IDR= barely changed after the decision, while the main stock index .JKSE rose slightly. The rupiah has fallen 5.4% this year, making it the worst performing emerging currency in Asia so far in 2020.

Analysts have said they are monitoring BI’s debt monetisation operations closely particularly as parliamentary debates on amending the central bank act has raised concerns

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RBI holds rates steady, sees economic recovery taking root

RBI holds rates steady, sees economic recovery taking root

MUMBAI (Reuters) – The Reserve Bank of India (RBI) left key interest rates unchanged on Friday as widely expected, while keeping policy accommodative to help pull the coronavirus-ravaged economy out of its worst slump in four decades.

FILE PHOTO: A worker walks past the logo of Reserve Bank of India (RBI) inside its office in New Delhi, India July 8, 2019. REUTERS/Anushree Fadnavis

India’s economy has been the worst hit by the pandemic among major countries and new infections continue to climb, but RBI Governor Shaktikanta Das said there were some encouraging signs of a business turnaround and activity could return to growth in the January-March quarter.

As expected, the monetary policy committee (MPC) kept the repo rate, its key lending rate, at 4.0%, while the reverse repo rate or the key borrowing rate stayed at 3.35%.

The RBI has slashed the repo rate by 115 basis points (bps) since late March to cushion the shock from the coronavirus crisis and sweeping lockdowns to check its spread.

The RBI sees India’s real GDP contracting by 9.5% in the current fiscal year, Das said in a webcast after the MPC meeting.

“The MPC is of the view that revival of the economy from an unprecedented COVID-19 pandemic assumes the highest priority in the conduct of monetary policy,” he said.

“The MPC decides to maintain status quo on the policy rate in this meeting and await the easing of inflationary pressures to use the space available for supporting growth further.”

August inflation, at 6.69%, held above the top end of the RBI’s medium-term target range of 2-6% for the fifth consecutive month amid supply disruptions.

“The main reason for inaction today was the stickiness of inflation,” said Shilan Shah, senior India economist at Capital Economics in Singapore.

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Airbus Takes a Risky Course and Holds the Line on Production

Airbus Takes a Risky Course and Holds the Line on Production

Airbus (OTC:EADSY) ended last month with a whopping 7,501 commercial jet orders in its backlog. That’s close to a record high and represents more than eight years of production at 2019 production rates.

This big order backlog hasn’t shielded Airbus from the COVID-19 aviation downturn, though. The European aerospace giant has been forced to cut production significantly this year. With air travel demand showing no signs of recovery so far, Airbus faces pressure to cut output even further. So far, it is resisting this pressure, according to a recent Reuters report. This is a risky strategy that could pay off if demand rebounds meaningfully within a year or so, but could backfire otherwise.

Airbus has reduced production

Airlines across the world are bleeding cash and have cut capacity dramatically. As a result, even those that had aggressive growth or replacement plans entering 2020 now have no need for new jets in the near term. This led to a sharp drop in aircraft deliveries at both Boeing (NYSE:BA) and Airbus last quarter.

An Airbus A350 flying in front of a cloud.

Image source: Airbus.

Boeing is radically slashing production to match demand. Wide-body production will decline by about 50%. Demand for freighter and military variants of the 747, 767, and 777 is the only thing preventing an even bigger output cut. Meanwhile, it plans to gradually ramp up 737 MAX production to a rate of 31 per month by early 2022. That would still be 46% below its previously planned production rate of 57 per month. But with more than 450 737 MAX jets in storage waiting to be delivered, it can’t go any faster.

Airbus has also reduced its near-term wide-body production plans by nearly 50%, albeit from a lower base. However, it made more modest adjustments to its narrow-body output, cutting A320-family production by about a third and

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