The German economy contracted at its steepest rate on record in the second quarter as the government desperately trys to mitigate the effects of the pandemic in the run-up to elections in the autumn of 2021.
Markets were expected to open in the green after the German government agreed to prolong the furlough scheme until the end of 2021 to allow companies hold on to workers in Europe’s biggest economy.
This comes after the yuan rose toward a seven-month high after US and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal, which eased concerns about a diplomatic standoff between the world’s two-largest economies. The greenback took a hit after data on Tuesday showed US consumer confidence tumbled to the lowest in more than six years due to concerns about coronavirus-induced job losses.
Traders will look to Powell’s speech on Thursday at the annual Jackson Hole retreat to determine what steps the Fed is willing to take to safeguard a fragile economic recovery.
“I expect Powell to use forward guidance to send a dovish message that rates will remain low for a long time, which feeds into dollar weakness,” said Minori Uchida, head of global market research at MUFG Bank in Tokyo.
“You could say we are in a long-term correction of excessive dollar strength.”
Against the euro, the dollar stood at $1.1816 on Wednesday following a 0.4 percent decline in the previous session.
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9.25am update: FTSE falls as Germany extends furlough scheme
Markets were expected to open in the green after the German government agreed to prolong the furlough scheme until the end of 2021 to allow companies hold on to workers in Europe’s biggest economy.
However, markets opened in the red as the German economy contracted at its steepest rate on record
The move contrasts sharply with the UK’s approach after chancellor Rishi Sunak pledged to end the country’s “furlough” scheme in October.
8.05am update: FTSE plummets on open
FTSE has dropped sharply this morning, as the UK index suffers a worrying start to the day’s trading.
FTSE closed at 6,037 yesterday but within five minutes this morning it had dropped to 5,998.
This marks a drop of almost 40 points in just five minutes.
6.36am update: Ex-Trump adviser Cohn seeks $600 million for blank-check company IPO
Gary Cohn, the former economic adviser to U.S. President Donald Trump, has teamed up with investor Clifton S. Robbins to seek $600 million in an initial public offering (IPO) for a new blank-check acquisition company, filings showed on Tuesday.
Cohn is the latest high-profile name to join the frenzy of Wall Street dealmaking related to special purpose acquisition companies (SPACs).
SPACs were considered a banking backwater a decade ago but have emerged in 2020 as one of the most active areas on Wall Street, driven by splashy deals for the likes of space tourism company Virgin Galactic Holdings Inc and fantasy sports and gambling company DraftKings Inc.
High-profile financiers such as Bill Ackman, Michael Klein and Chamath Palihapitiya as well as former U.S. House Speaker Paul Ryan are among the sponsors for SPAC IPOs in 2020.