· Dollar languishes at two-month low after Biden clinches U.S. presidency
The dollar hit a 10-week low on Monday as investors heralded Joe Biden’s election as U.S. president by buying trade-exposed currencies on expectations that a calmer White House could boost world commerce and that monetary policy will remain easy.
The Chinese yuan struck a 28-month peak, the New Zealand dollar made a 19-month high and the Australian dollar hit a seven-week top as the dollar index fell to its lowest since early September. The South Korean won hit a 21-month high of 1,115.33 per dollar.
Sterling hit its highest in more than two months while the euro rose 0.1%, extending an almost 2% gain from last week to hit a two-month high of $1.1895.
The yuan, particularly sensitive to the election outcome because of a perception that Biden will take a softer or more predictable line on China, was also boosted by strong Chinese trade data over the weekend to stand at 6.5826 per dollar.
We would caution that heightened volatility is not necessarily behind us, even though the election result is all but settled,” said Commonwealth Bank of Australia currency analyst Kim Mundy in a note.
In emerging markets, the beaten-down Turkish lira rose as much as 2% in the wake of the ouster of the central bank chief and the resignation of Turkey’s finance minister over the weekend.
The lira has slid 30% to record lows this year amid the coronavirus pandemic as investors worried about falling forex reserves and double-digit inflation.
· Facing a divided U.S., Biden and aides plan for the 'hard work of governing'
Joe Biden and his advisers on Sunday were working on plans to tackle the crises facing a divided America, first and foremost the raging coronavirus pandemic, a day after the Democrat won enough states to clinch the U.S. presidency.
Republican Donald Trump, the first U.S. president to lose a re-election bid in 28 years, gave no sign of conceding, instead pressing ahead with legal fights challenging the outcome.
Top Republicans in Congress likewise had not acknowledged Biden’s victory, in a sign of the charged partisan atmosphere he will face when he takes office on Jan. 20, although some members of Trump’s party and a bipartisan group focused on the transition urged the president to cooperate.
Biden delivered a message of unity and conciliation in a speech in his home state of Delaware on Saturday, saying it was “time to heal” the nation.
· Biden win opens door for improved predictability in China-U.S. relations: state media
Chinese state media struck an optimistic tone in Monday in editorials reacting to Democrat Joe Biden’s win of the U.S. presidential elections, saying relations could be restored to a state of greater predictability and could start with trade.
The Trump administration had deliberately created tensions in China-U.S. relations, especially after adopting a campaign strategy of pressuring China, which led to “bubbles” occurring in U.S.-China policy, it said.
“We believe it is possible to pop those bubbles,” it said. “It’s in the common interests of people from both countries and of international community that China-U.S. relations become eased and controllable.”
· Biden to launch COVID-19 task force, Trump plans rallies to protest election
President-elect Joe Biden will convene a coronavirus task force on Monday to examine the No. 1 problem confronting him when he takes office in January, while President Donald Trump pursues several long-shot gambits to hold on to his job.
The Democratic former vice president will then give remarks in Wilmington, Delaware, about his plans for tackling COVID-19 and rebuilding the economy. He spent much of the campaign criticizing Trump’s handling of the crises and has vowed to listen to scientists to guide his own approach.
But Trump has not acknowledged defeat and has launched an array of lawsuits to press claims of election fraud for which he has produced no evidence. State officials say they are not aware of any significant irregularities.
Trump has no public events scheduled for Monday, and he has not spoken in public since Thursday. As part of a public campaign to question the election results, he is planning to hold rallies to build support for his fight over the outcome, campaign spokesman Tim Murtaugh said.
· UK sees Brexit goodwill, open to a sensible fishing compromise
Britain said on Monday it was open to a sensible compromise on fishing and that there was goodwill on both sides to progress towards a Brexit trade deal as the European Union’s top negotiator began another round of talks in London.
· Germany: Biden won't focus on NATO defence spending target as much as Trump
German Foreign Minister Heiko Maas told broadcaster Deutschlandfunk on Monday that not everything would change under U.S. President-elect Joe Biden but much would get better.
· Rise in exports offers Germany hope of avoiding fourth-quarter slump
German exports rose by more than expected in September, and foreign trade gave Europe’s largest economy a boost going into the fourth quarter as it struggles to avoid slipping into a double dip contraction.
Seasonally adjusted exports rose 2.3% on the month after an upwardly revised 2.9% rise in August, the Federal Statistics Office said. Imports fell by 0.1% after a rise of 5.8% the previous month. The trade surplus expanded to 17.8 billion euros, the Office said.
Economists polled by Reuters had expected exports to rise by 2.0% and imports to increase by 2.1%. The trade surplus was predicted to come in at 15.8 billion euros.
“Looking ahead, exports (and industrial production) could still prevent the economy from falling into a second lockdown depression in the final quarter of the year,” ING economist Carsten Brzeski said.
“With U.S. President-elect Biden, the threat of U.S. tariffs on European (read German) automotives should disappear,” he added.
· French economy operating down 12% under new lockdown - central bank
France’s economic activity is 12% lower than normal this month after the country entered a coronavirus lockdown for the second time this year, the central bank said on Monday.
The government imposed the new lockdown on Oct. 30 to rein in a surge in new cases although the restrictions were softer than the first time to limit the impact to the euro zone’s second-biggest economy.
The Bank of France said economic activity was expected to be reduced by 12% of normal levels as a result, worse than the 4% drop in October but far better than the 31% loss seen in April during one of the strictest lockdowns in Europe.
· China's tech industry relieved by Biden win - but not relaxed
China’s technology industry, one of President Donald Trump’s main targets in Washington’s tussles with Beijing, hopes Joe Biden can create a more constructive relationship - but few think the rivalry will deescalate, executives and analysts say.
“When Biden takes office, tech companies in China might be relieved,” said Fang Xingdong, director of the Consortium of Internet and Society at the Communication University of Zhejiang.
“At least, the United States is supposed to re-advocate openness, re-respect fair competition, and re-advocate innovation,” Fang added. “However, in the high-tech field, competition and game theory will not end, and China and the U.S. will compete with each other with true innovation capabilities in the next decade.”
· U.S.-China rivalry to remain
Analysts have pointed out that a Biden administration would be able to work with U.S. allies more effectively than Trump to pursue a more cohesive strategy against China. One of the few issues both Republicans and Democrats have come to agree on is tougher policy against the Communist Party-led country.
In his first speech as president-elect, Biden said he would focus on controlling the coronavirus pandemic. He did not mention China.
In keeping with a growing theme in both countries, the president-elect holds that “economic security is national security,” according to his foreign policy plan.
· U.S.-China trade tensions won’t be going away under Biden’s administration
U.S.-China trade tensions are set for more predictability and calmer rhetoric after Joe Biden’s presidential win — which likely means calmer rhetoric in a continued tough stance on Beijing.
“The issues that remain between the U.S. and China commercial relationship don’t change with (the) change of administration,” said Greg Gilligan, chairman of the Beijing-based American Chamber of Commerce in China.
“There’s pressure on both sides to remain fairly hawkish simply because domestic politics don’t allow for yielding the hawkish ground to someone else,” Gilligan said, referring to the tougher stance each country has on the other.
· Washington should not force countries to choose between the U.S. and China, says ex-diplomat
Many countries, especially those in Southeast Asia, want to maintain “strong links” with the U.S. — and Washington shouldn’t force them to choose sides in its rivalry with Beijing, a prominent former Singapore diplomat said on Monday.
“Trump’s erratic policies towards China, especially putting countries in a difficult position having to choose between China and the U.S., made everybody very, very uncomfortable,” Kishore Mahbubani, now a distinguished fellow at the National University of Singapore’s Asia Research Institute, told CNBC’s “Squawk Box Asia.”
One example is Washington’s call to countries to ban Chinese tech firm Huawei from their 5G networks, citing threats to national security.
In the lead up to last week’s election, Secretary of State Mike Pompeo — who was visiting several Asian countries — gave a series of speeches that attempted to bolster U.S. allies against China.
The U.S. has for many years been an important presence in the region through both security and economic engagements. But since Trump took office, the U.S. withdrew from the Trans-Pacific Partnership or TPP — a mega trade pact that included several Southeast Asian countries.
“I think if Biden could make the decision privately and independently, he would love to go back and join the TPP. But he’ll be massacred domestically because, as you know in the United States, the political environment against free trade agreements has become very, very toxic,” he said.
· Brent crude tops $40 after Biden's win lifts risk-takers
Oil prices gained more than 2% on Monday, with Brent futures rising above $40 a barrel, after Joe Biden clinched the U.S. presidency and buoyed risk appetites, offsetting worries about the impact on demand from a worsening coronavirus pandemic.
Brent crude futures for January climbed $1.06, or 2.7%, to $40.51 a barrel by 0453 GMT, and U.S. West Texas Intermediate crude for December was at $38.21 a barrel, up $1.07, or 2.9%.
Oil recovered from a 4% decline on Friday, rising along with other financial markets after Biden emerged as the winner in the U.S. presidential race on Sunday. Meanwhile, the dollar weakened, boosting commodities priced in the greenback as they became more affordable for investors holding other currencies.
· How a Biden presidency would transform the U.S. energy landscape
Democrat Joe Biden has won the November U.S. presidential election, according to several major networks. Here are some of the changes that could occur in U.S. energy policy under his administration:
INTERNATIONAL OIL SUPPLIES
Biden has shown an interest in multilateral diplomacy similar to previous Democratic administrations. That could mean an eventual path for OPEC members Iran and Venezuela to get out from under Washington’s sanctions and start pumping again, if the right conditions are met.
LINE TO OPEC
Biden lacks the chummy rapport that Trump had developed with Saudi Arabia’s defacto leader Crown Prince Mohammed bin Salman. That country is the biggest voice in the Organization of the Petroleum Exporting Countries, meaning Biden may not engage as closely on the group’s production policy. He is also more likely to rely on quiet diplomatic channels for influencing OPEC than Trump’s Twitter-centered approach.
A GREEN TRANSITION?
A Biden administration would look to re-enter the Paris Climate Agreement, an international pact negotiated during the Obama administration to fight global warming that Trump pulled away from saying it could hurt the U.S. economy.
Biden has also vowed to bring U.S. emissions down to net zero by 2050, including by bringing emissions from the power industry to net zero by 2035 - a goal that will be tricky to accomplish without a Democratic majority in Congress.
Biden’s view is that climate change is an existential threat to the planet, and that a transition from fossil fuels can be an economic opportunity if the United States moves fast enough to become a leader in the clean energy technology.
FEDERAL DRILLING
While Trump had sought to maximize domestic oil and gas production, Biden has promised to ban issuance of new drilling permits on federal lands and waters in order to fight global climate change.
The United States produced nearly 3 million barrels of crude oil per day from federal lands and waters in 2019, along with 13.2 billion cubic feet per day of natural gas, according to Interior Department data.
That amounts to about a quarter of total domestic oil output and more than an eighth of total U.S. production of gas. A federal ban on new permits would mean those numbers trend toward zero over a matter of years.
Reference: Reuters, CNBC
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