· Risk currencies gain as Trump gives way to transition, Yellen emerges as Biden pick
Risk-sensitive currencies gained on Tuesday as investors breathed easier after U.S. President Donald Trump accepted the start of a transition to a Biden administration, that is expected to include former Federal Reserve Chair Janet Yellen as Treasury secretary.
Trump gave the head of the General Services Administration the go-ahead to proceed with a transition to a government led by President-elect Joe Biden despite plans to continue with legal challenges.
Democratic allies to the Biden campaign said Yellen is expected to be nominated to become Treasury Secretary, heartening investors as she has called for increased government spending to lift the economy out of a coronavirus induced recession.
The Australian dollar ticked up 0.4% to $0.7313 while emerging market currencies such as the Mexican peso and the South African rand also gained about 0.4%.
The safe-haven yen traded at 104.49 per dollar, having slipped about 0.6% overnight while the euro slipped to $1.1844 on Monday.
That helped to lift the dollar index to 92.463, off Monday’s low of 92.013, its lowest since Sept. 1.
The pound stood at $1.3330, having hit a high of $1.3396 on Monday.
The British pound held firm near a 12-week high against the dollar and six-month high versus the euro, propped up by bets Britain and the European Union would clinch a Brexit trade deal.
· Bitcoin at $100,000 in 2021? Outrageous to some, a no-brainer for backers
Bitcoin investors, which include top hedge funds and money managers, are betting the virtual currency could more than quintuple to as high as $100,000 in a year.
It’s a wager that has drawn eye-rolls from skeptics who believe the volatile cryptocurrency is a speculative asset rather than a store of value like gold.
Since January, bitcoin has gained 160%, bolstered by strong institutional demand as well as scarcity as payment companies such as Square and Paypal buy it on behalf of customers.
Bitcoin is within sight of its all-time peak of just under $20,000 hit in December 2017. It debuted in 2011 at zero and was last trading at $18,415.
Going from $18,000 to $100,000 in one year is not a stretch, Brian Estes, chief investment officer at hedge fund Off the Chain Capital, said.
Estes predicts bitcoin could hit between $100,000 and $288,000 by end-2021, based on a model that utilizes the stock-to-flow ratio measuring the scarcity of commodities like gold. That model, he said, has a 94% correlation with the price of bitcoin.
Citi technical analyst Tom Fitzpatrick said in a note last week that bitcoin could climb as high as $318,000 by the end of next year, citing its limited supply, ease of movement across borders, and opaque ownership.
· Goldman cuts fourth-quarter and first-quarter GDP forecasts, cites Covid resurgence
Goldman Sachs slashed its economic outlook for the current quarter and first quarter of 2021 as the U.S. grapples with a new wave of Covid-19 infections and fresh lockdown restrictions.
“The rapid and broad-based resurgence of the coronavirus has led us to downgrade our Q4 and Q1 GDP forecasts,” Jan Hatzius, Goldman’s chief U.S. economist, said in a note. “The pace of recovery would likely slow in the winter months, with a lack of fiscal support and a deteriorating virus situation pointing to significant downside risks.”
· U.S. holiday travelers voice dread, determination as they defy COVID-19 warnings
Millions of Americans appeared to be disregarding public health warnings and traveling ahead of the Thanksgiving holiday, likely fueling an alarming surge in coronavirus infections before a series of promising new vaccines are expected to become widely available.
Although fewer in number than last year, U.S. travelers were flocking to airports and highways against the advice of the Centers for Disease Control and Prevention (CDC), the U.S. surgeon general and Dr. Anthony Fauci, the nation’s top infectious disease expert.
As U.S. infections of the highly contagious respiratory virus continued to spread swiftly, hitting a new record of 168,000 new cases per day on average, many travelers expressed equal parts of determination and dread.
Some 1 million passengers passed through airport security gates on Sunday, the highest number since March. It was the second time in three days U.S. air travel screenings surpassed 1 million, though the numbers are down nearly 60% from the same time last year, the U.S. Transportation Security Administration said.
At the same time, rates of coronavirus infections, deaths and hospitalizations are soaring.
· Trump administration officially begins transition to Biden after weeks of delay
General Services Administration chief Emily Murphy on Monday told President-elect Joe Biden that the Trump administration is making federal resources available for his transition into office.
The letter marks one of the first clear indications of the Trump administration acknowledging defeat in the 2020 election. But Trump has still refused to explicitly concede the race to Biden, who is projected to win 306 Electoral College votes to Trump’s 232.
Trump has falsely asserted that he won the election “by a lot,” and has promoted a variety of conspiracies that allege widespread electoral fraud without evidence.
· Biden will likely have to reimagine the future of U.S. economic leadership in Asia, says expert
The Biden administration will likely have to reimagine the future of U.S. economic leadership in Asia-Pacific following two massive free trade agreements signed by countries in the region, according to a former foreign policy advisor.
The first of the two trade agreements is the Trans-Pacific Partnership (TPP): It was negotiated by the Obama administration but never approved by Congress. President Donald Trump subsequently pulled the U.S. out of the TPP in 2017 as the remaining 11 countries renegotiated and signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP a year later.
“So far, the incoming administration has not committed one way or the other to the future of the TPP,” Richard Fontaine, CEO of the Center for a New American Security, told CNBC’s “Street Signs Asia” on Tuesday. Fontaine previously served as foreign policy advisor to Sen. John McCain and worked at the U.S. State Department.
He explained that President-elect Joe Biden and his administration will enter an era where the U.S. is party to neither the TPP nor the RCEP. “They are going to have to at least consider what the future of U.S. economic leadership in Asia looks like,” he said.
Trade policy
According to Fontaine, a big change between the Trump administration and the incoming Biden administration would be the latter’s approach to multilateralism.
“The president-elect and his team have been at pains to say how they will work with partners and allies and like-minded countries around the world on key issues ranging from climate change and global health, and the pandemic, to China and all other kinds of things,” Fontaine said.
Trade on the other hand remains a complicated issue subject to domestic politics, he said.
Whether the tariffs imposed by the Trump administration on China are maintained or relaxed would “set the tone for U.S.-China relations for quite a while in this (Biden) administration,” Fontaine said.
· German economy grew by 8.5% in third quarter
Germany’s gross domestic product grew by a record 8.5% in the third quarter as Europe’s largest economy partly recovered from an unprecedented plunge caused by the first wave of the COVID-19 pandemic in spring, the statistics office said on Tuesday.
The reading marked an upward-revision to an earlier flash estimate of 8.2% quarter-on-quarter growth in the July-September period and followed a 9.8% plunge in the second quarter.
· Germany's DAX to expand to 40 members from 30 in index shake-up
Germany’s blue-chip DAX index will expand to 40 from the current 30 companies with tougher membership criteria, exchange operator Deutsche Boerse said on Tuesday.
The overhaul comes in the wake of the Wirecard accounting scandal and marks the biggest shake-up in the index’s history.
· Asia Leads The Best Way In Journey Recreation: Agoda From Reserving Holdings
“Asia is generally a leader,” said John Brown, managing director of Agoda, a subsidiary of American online travel company Booking Holdings. “We have seen again in markets like Taiwan, certainly places like Thailand, where they really have the best control over Covid – these are the markets where we see the domestic bookings doing the best.”
The best pockets of recreation are domestic travel in Taiwan, Thailand and, increasingly, Vietnam, he said.
· Credit stress hurts new money going into China’s massive infrastructure project, says Moody’s
Investments in China’s massive infrastructure project in 2020 could fall “well short” of last year’s level as the coronavirus pandemic caused financial strains in participating countries, according to Moody’s Investors Service.
The Belt and Road Initiative is an ambitious Chinese policy that started out focusing on building infrastructure networks connecting China to central Asia, Europe and Africa. It has since morphed into what some experts say is China’s way of trying to influence technology and governance around the world.
· Brent hits highest since March, spurred by coronavirus vaccine hopes
Brent crude prices hit their highest levels since March as news of a third promising coronavirus vaccine candidate spurred hopes of a quicker recovery in oil demand, while U.S. President-elect Joe Biden received the go-ahead to begin his leadership transition.
Brent crude futures rose 43 cents, or 0.9%, to $46.49 a barrel by 0522 GMT, while U.S. West Texas Intermediate crude added 45 cents, or 1.1%, to $43.51 a barrel.
Brent rose to a session high of $46.56 earlier on Tuesday, the highest level traded since early March before Saudi Arabia initiated a price war with Russia, which sent oil prices crashing. Both oil benchmarks settled up about 2% on Monday after gaining about 5% last week.
· OPEC experts meet ahead of next week's crucial gathering
OPEC and its allies are bracing for a week of technical meetings to prepare the ground for next week’s ministerial gathering, which is set to discuss extending oil output curbs into next year due to weak demand amid a second wave of COVID-19.
OPEC’s economic commission board will meet on Wednesday and Thursday while OPEC and non-OPEC technical experts will meet on Friday, three OPEC sources said.
The board will discuss possible scenarios for ministers who will meet on Monday and Tuesday next week.
All the meetings will be held virtually due to the pandemic.
Reference: CNBC, Reuters
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