· Dollar steadies but concerns about coronavirus and Biden transition loom
The dollar steadied against most currencies on Tuesday as a return of coronavirus restrictions in some U.S. states and worries about a smooth transition for President-elect Joe Biden offset optimism about a coronavirus vaccine.
The British pound edged higher on media reports the UK could reach a post-Brexit trade agreement with the European Union by early next week.
The dollar was quoted at $1.1858 per euro, on course for its fourth straight session of declines.
Sterling edged up to $1.3221 and also gained to 89.71 pence per euro.
The greenback held steady at 104.52 yen. Investors in the dollar are looking ahead to the release of U.S. retail sales and industrial production later on Tuesday to gauge the health of the economic recovery.
The dollar index against a basket of major currencies stood at 92.503, close to a one-week low.
New infections are also increasing in Britain, Europe, and Japan, which further clouds the economic outlook.
The onshore yuan edged up to 6.5678 per dollar, approaching a 28-month high set last week, as positive economic data continues to support the currency.
· We can stop COVID-19: Moderna vaccine success gives world more hope
Moderna’s interim analysis was based on 95 infections among trial participants who received the vaccine or a placebo. Only five infections occurred in volunteers who received the vaccine mRNA-1273, which is administered in two shots 28 days apart.
“The vaccine is really the light at the end of the tunnel,” Dr. Anthony Fauci, the top U.S. infectious diseases expert said. He urged Americans not to let their guard down and to continue washing hands and being vigilant about social distancing.
Even with fast authorization, the vaccines will not come in time for most people celebrating the U.S. Thanksgiving and end-of-year holidays, when families and friends come together - just the types of gatherings public health officials warn against.
Moderna expects to have enough safety data required for U.S. authorization in the next week or so and expects to file for emergency use authorization (EUA) in the coming weeks.
· Factbox: Moderna COVID-19 vaccine stability eases distribution challenges
· ‘We could effectively end this pandemic in 2021’ with Pfizer and Moderna Covid vaccines
Dr. Scott Gottlieb told CNBC on Monday that the devastating coronavirus pandemic could “effectively” be ended next year, following promising developments around Moderna’s Covid-19 vaccine.
“If these full data sets hold, when the full data comes out, we may have two highly effective vaccines against Covid,” Gottlieb, a board member of Pfizer, said on “Squawk Box.”
· Analysis: Despite vaccine progress, investors eye Fed support as coronavirus surges
Investors are weighing the chances the Federal Reserve will increase its purchases of U.S. government debt in coming weeks to counteract the economic fallout of a COVID-19 resurgence, an intervention that could reverse a recent rise in Treasury yields to multi-month highs.
News that two coronavirus vaccines proved highly effective in late-stage trials in recent days have stoked investors’ appetite for risk, sending yields, which move inversely to bond prices, to their highest levels since March and U.S. stock markets to record highs.
Still, some investors believe that rising coronavirus cases may threaten the fragile U.S. economic recovery at a time when fiscal stimulus is likely to be delayed and widespread access to a vaccine remains months away. The United States recorded more than 1 million new COVID-19 cases last week.
That combination of negative factors could push the central bank to increase its support, some investors argue, even though asset purchases already stand at record levels and the Fed has not indicated it intends to raise them at its next two-day policy meeting, Dec. 15-16. Fed Chairman Jerome Powell is slated to speak Tuesday afternoon, and investors will be listening carefully for any insight into the Fed’s thinking.
Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered, believes the Fed may surprise markets by increasing its asset purchases to $120 billion a month before the December meeting if it appears that rising COVID-19 cases are weighing on the economy.
The Fed has bought at least $80 billion a month since the start of the pandemic.
Analysts at JPMorgan on Monday said in a note that they expect the Fed to increase the average maturity of its Treasury holdings at its December meeting, which could push yields lower.
“My view is the Fed will increase (bond purchases) to $160 billion a month in December even if we have good news on the vaccine front and irrespective of what the news is regarding economic recovery,” said Thomas Costerg, senior economist at Pictet Wealth Management in Geneva. “They have learned their lessons from the past experience.”
· Biden turns focus to building White House team as Trump legal efforts flounder
President-elect Joe Biden will focus on shaping his core White House team on Tuesday while outgoing President Donald Trump presses on with his increasingly tenuous legal fight to reverse his loss in the U.S. election.
Several of Biden’s senior campaign staff have been discussing their roles in the transition and new administration that takes over Jan. 20 - and some of those roles could be announced as soon as Tuesday, according to a person familiar with the matter.
Biden urged Congress to pass pandemic relief assistance. Talks on such legislation stalled for months before the Nov. 3 election.
Biden beat Trump by the same 306-232 margin in the state-by-state Electoral College that prompted Trump to proclaim a “landslide” victory in 2016. Biden also won the national popular vote by at least 5.6 million votes, or 3.7 percentage points, with some ballots still being counted.
Election officials from both parties have said there is no evidence of major irregularities. Federal election security officials have decried “unfounded claims” and expressed “utmost confidence” in the election’s integrity.
· These forces offer Biden administration a ‘Goldilocks’ market scenario in 2021: Invesco
In just over two months, President-elect Joe Biden will assume office.
And, while the market has been volatile in recent weeks, Kristina Hooper, chief global market strategist at Invesco, sees a number of tail winds that could set the foundation for a positive first year under a new executive leadership.
“I think of it as sort of like a Goldilocks environment in that what we feared, which was a blue wave, didn’t come to fruition. In fact, what we have is likely a scenario, a very likely scenario, where we don’t get any tax hikes which I believe was the biggest fear that investors had going into this election. So that’s a real positive, but we do get a return to a more traditional trade policy which should also be positive for investors,” Hooper told CNBC’s “Trading Nation” on Friday.
The potential for a split congress – a Democrat-controlled House and Republican-led Senate – has given investors a degree of certainty that there will be no sweeping changes to the tax code. However, control of the Senate has yet to be determined by two runoff races in Georgia. The current divide is 50-48.
Hooper also sees Biden’s likely command over the coronavirus pandemic through federal spending and support and progress toward a vaccine as two positive developments for the market.
“I do believe a vaccine is a game changer,” said Hooper. “While we’re unlikely to see great strength in the economy as we start 2021 – because we are of course fighting Covid-19 and it’s getting worse, not better – we do know there’s a light at the end of the tunnel, and that light is fairly close based on what medical experts have told us. So that at some point during 2021, when we get broad distribution of this vaccine, we’re likely to see a very significant change. This could be the ultimate coiled spring.”
· China's securities regulator hopes Sino-U.S. ties better with Biden administration
Beijing has said it expects the incoming Biden administration to meet China halfway, manage differences and push for the advancement of Sino-U.S. ties on the right track.
· U.S. may want to strike bilateral deals after being left out of the world’s largest trading bloc, HSBC says
· Singapore minister says ‘a long way to go’ before vaccine distribution, other precautions useful
· Singapore’s October exports unexpectedly fall 3.1% from last year
Singapore’s October non-oil domestic exports (NODX) unexpectedly fell 3.1% from a year earlier, coming in well below forecasts, as both electronics and non-electronics shipments dropped, official data showed on Tuesday.
The figure missed a 5.7% rise forecast by economists in a Reuters poll, and compared with a slightly revised 5.8% increase in September.
On a seasonally adjusted month-on-month basis, exports decreased 5.3% in October after an 11.4% contraction the previous month, Enterprise Singapore said in a statement.
· South Korea to tighten social distancing, warns of new COVID-19 crisis
· Oil prices edge up as market eyes OPEC+ meeting, vaccine hopes
Oil prices edged up on Tuesday on expectations OPEC and its allies will extend oil production cuts for at least three months, while sentiment was bolstered by news of another promising coronavirus vaccine.
Brent crude futures for January LCOc1 rose 18 cents, or 0.4%, to $44.00 a barrel by 0737 GMT and U.S. West Texas Intermediate crude for December CLc1 added 8 cents, or 0.2%, to $41.42 a barrel.
Equity markets gained on hopes of a quicker economic recovery after Moderna Inc MRNA.O said its experimental COVID-19 vaccine was 94.5% effective in preventing infection based on interim late-state data.
Moderna's results came after Pfizer Inc PFE.N reported last week that its vaccine was more than 90% effective.
OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, is set to hold a ministerial committee meeting on Tuesday that could recommend changes to production quotas when all the ministers meet on Nov. 30 and Dec. 1.
In the United States, oil output from shale formations in December is expected to decline to the lowest level since June, according to the Energy Information Administration.
Reference: Reuters, CNBC
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