· Dollar loses ground, pound gains as traders eye Brexit talks
The dollar lost ground against other major currencies on Monday, while the pound and the euro drew strength from signs that Britain and the European Union could make progress negotiationg a post-Brexit trade deal.
Sentiment across markets were mixed, caught between fears of a resurgence of global coronavirus cases and hopes for a working vaccine that could help reignite global growth.
Against a basket of currencies, the dollar softened marginally, fetching 92.565 in Asian trade =USD.
Hopes for Brexit compromise emerged after news Dominic Cummings, the most powerful adviser to Prime Minister Boris Johnson, would leave Downing Street in mid-December.
Meanwhile, Britain’s top Brexit negotiator David Frost said on Sunday that Britain and the EU have made some progress in their post-Brexit trade deal negotiations but might not succeed in getting an agreement.
The British pound edged higher against the dollar GBP=D3, changing hands at 1.3226 per dollar, and against the common currency as well, and last stood at 89.61 pence per euro EURGBP=D3. The euro last sat 0.16% higher at 1.1854 per dollar EUR=EBS.
Global markets surged last week on optimism that a vaccine for COVID-19 would be available soon, with the dollar rising as traders quit their long-yen positions.
The yen edged higher at 104.49 per dollar JPY=EBS, having posted its worst weekly performance since early June last week.
Undermining the greenback more broadly, the total virus cases in the U.S. surpassed 11 million on Sunday as the pace of the pandemic quickened.
Data on Monday showed signs of economic recovery in China and Japan, the world’s second and third largest economies. China’s industrial output rose by a faster-than-expected 6.9% in October, while Japan’s economy grew at its fastest pace on record in the third quarter.
The Chinese yuan firmed following the upbeat economic data, rising to 6.5818 per dollar, hitting its one-week high CNY=.
· Biden to focus on plans for U.S. economy as Trump presses long-shot legal claims
President-elect Joe Biden on Monday will focus on plans for reviving a pandemic-battered U.S. economy as he prepares for his new administration, while President Donald Trump vowed to press ahead with long-shot court challenges to the election results.
Trump sent mixed messages on Sunday, briefly appearing to acknowledge defeat in a morning tweet, only to backtrack, saying he concedes “nothing” and repeating his unfounded accusations of voter fraud.
He later promised on Twitter to file “big cases showing the unconstitutionality of the 2020 Election,” even though he has made no headway with his legal challenges in multiple states so far.
Legal experts have said the Trump litigation stands little chance of altering the election’s outcome, and election officials of both parties have said there is no evidence of major irregularities.
· Huawei hopes Biden presidency brings a ‘reset’ to relations, says tech officer
Huawei hopes to “reset” relations with the United States under Joe Biden’s presidential administration, according to a senior executive at the telecom equipment and mobile phone giant.
Paul Scanlan, chief technology officer at Huawei Carrier Business Group, told CNBC’s Arjun Kharpal that when there “is a change in government, there is always the opportunity to reset relationships. The unit of Huawei focuses on deploying 5G networks.
The Trump administration announced sanctions against China’s Huawei in August that effectively cut off the company from some technology it got from the United States.
Analysts said economic benefits of RCEP are modest and would take years to materialize. But the deal is a geopolitical victory for China at a time when the U.S. appears to be retreating from Asia-Pacific given President Donald Trump’s “America First” foreign policy, they added.
It’s also not clear whether the U.S. will negotiate any mega trade deals with economies in the region under President-elect Joe Biden, the analysts said.
· China faces the challenge of keeping its Big Tech in check — just like the U.S. does
Experts say Beijing will need to ensure that its drive for new regulations balances its push to become a global technological leader.
Like in the U.S., China’s tech sector has expanded via a largely unencumbered path. In some areas, regulators have already stepped in and are now stepping up those efforts.
· China’s factory output rises more than expected, retail sales continue to grow in October
China’s industrial output rose at a faster-than-expected pace in October, while retail sales continued to recover albeit at a slower-than-forecast pace as the world’s second-largest economy emerged from its Covid-19 slump.
Industrial output climbed 6.9% in October from a year earlier, data from the National Statistics Bureau showed on Monday, in line with September’s gain. Analysts polled by Reuters had expected a 6.5% rise.
Retail sales rose 4.3% on-year, missing analysts’ forecasts for 4.9% growth but faster than a 3.3% increase in September.
· Japan’s economy rebounds from record slump as pandemic pain eases
Japan’s economy grew an annualized 21.4% in the third quarter, data showed on Monday, rebounding sharply from a record postwar slump in a sign the country is gradually emerging from the damage caused by the coronavirus pandemic.
Still, many analysts expect any further rebound in the economy to be moderate as persistent weakness in consumption and a resurgence in infections at home and abroad clouds the outlook.
The expansion in gross domestic product (GDP) compared with a median market forecast for an 18.9% gain, Cabinet Office data showed. It marked the first increase in four quarters and followed a 28.8% plunge in April-June
On a quarter-on-quarter basis, the economy grew 5.0%, faster than forecasts of 4.4% and pulling out of recession.
Private consumption, which makes up more than half of the economy, rose 4.7% in July-September from the previous quarter, rebounding from a plunge in April-June blamed on lockdown measures aimed at preventing the spread of the virus.
External demand – or exports minus imports – added 2.9% points to GDP growth thanks to a rebound in overseas demand that pushed up exports by 7.0%.
But capital expenditure fell 3.4%, shrinking for a second straight quarter, suggesting that uncertainty over the pandemic’s fallout was weighing on business sentiment.
Japan has so far announced two stimulus packages worth a combined $2.2 trillion to ease the pain from the health crisis, including cash payments to households and small business loans.
Despite some signs of improvement in recent months, analysts expect the world’s third-largest economy to shrink 5.6% in the current fiscal year ending in March 2021. It could take years to return to pre-Covid levels.
· Singapore minister says mega trade deal backed by China ‘signals a commitment’ to economic integration
The formation of the world’s largest free trade bloc in Asia-Pacific sends a signal that there’s a need for economic integration despite existing challenges, according to a Singapore government official.
Fifteen Asia-Pacific countries, including Singapore, signed the Regional Comprehensive Economic Partnership (RCEP) on Sunday. Those nations have a combined population of over 2 billion and total GDP of more than $26 trillion — and make up about 30% of the world population and global economy.
· Australia back on outbreak alert as state virus infections spike
· Oil climbs higher on China, Japan rebound, hopes of OPEC+ supply curb
Oil prices climbed on Monday, recouping some losses from the previous session as hopes that OPEC+ will hold current output curbs offset concerns over weaker fuel demand due to growing coronavirus infections and higher production in Libya.
Figures showing a rebound in the world’s second and third largest economies, China and Japan, also supported prices, along with data that Chinese refineries processed the most crude ever in October on a daily basis.
Brent crude futures for January LCOc1 rose 54 cents, or 1.3%, to $43.32 a barrel by 0723 GMT, while U.S. West Texas Intermediate crude for December CLc1 was at $40.76 a barrel, up 63 cents, or 1.6%.
“Fundamentally China’s numbers do support why oil prices can keep at these levels,” said OCBC economist Howie Lee.
Both contracts gained more than 8% last week on hopes of a vaccine for COVID-19 and that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, will maintain lower output next year to support prices.
Reference: Reuters, CNBC
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