· Dollar hovers near 2-1/2 low as traders eye U.S. stimulus talks
The dollar stayed near a 2 1/2-year low on Wednesday as investors cautiously eyed developments in talks about further fiscal stimulus from the United States, while risk currencies held onto gains on improving risk appetite.
Against major currencies, the dollar index fell 0.7% to 91.318, having hit its lowest level since late April 2018 of 91.263 overnight.
The Euro and the Kiwi steadied after an overnight jump to their 2 1/2-year highs as the dollar broadly weakened.
U.S. Treasury Secretary Steve Mnuchin and House of Representatives Speaker Nancy Pelosi held stimulus talks for the first time since the election, while a bipartisan group of senators and House members proposed $908 billion worth of coronavirus relief measures.
Pelosi said in a statement after the talks that Mnuchin would review coronavirus relief proposals.
U.S. Senate leader Mitch McConnell said on Tuesday that Congress should include a fresh wave of coronavirus stimulus in a must-pass $1.4 trillion spending bill aimed at heading off a government shutdown in the midst of a pandemic.
“The currency market is skeptical whether these proposals could be agreed in a swift manner, since hopes were shattered once already when a stimulus package didn’t come into fruition before the presidential election,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
“Traders are closely eyeing for convincing clues that the agreement is actually reached,” he said.
Also weighing the safe-haven dollar was weaker-than-expected U.S. manufacturing activity data and speculation that the Federal Reserve will act to support the economy before vaccinations become available.
The euro held ground against the dollar after its strong performance overnight as it hit the highest level since May 2018. It last fetched $1.2067.
Analysts said the European Central Bank could act against a rapid rise of the currency.
Sterling also remained near a three-month peak against the greenback after Times Radio said Brexit trade deal talks have entered the “tunnel” stage of negotiations.
Separately, a senior British minister said on Tuesday there was still a chance of a no-trade deal Brexit as talks with the European Union had snagged on fishing, governance rules and dispute resolution.
The pound was little changed at $1.3421.
The risk-sensitive Aussie firmed to 0.7389 per dollar after the Australian GDP data was released, while the New Zealand dollar changed hands at $0.7071, holding steady near the highest level since April 2018 hit overnight.
Bitcoin rose to 0.3% at $18,833.63 after hitting a record high just under $20,000 on Tuesday.
· Trump Covid vaccine czar says side effects ‘significantly noticeable’ in 10% to 15% of recipients
President Donald Trump’s coronavirus vaccine czar said Tuesday that Pfizer’s and Moderna’s Covid-19 vaccines are safe, with only 10% to 15% of volunteers reporting side effects that were “significantly noticeable.”
The side effects, which come from the vaccine shots, can last up to a day and a half, said Dr. Moncef Slaoui, who is leading the Trump administration’s Covid-19 vaccine program Operation Warp Speed. The people who’ve suffered from side effects have reported redness and pain at the injection site as well as fever, chills, muscle aches and headaches, he said, adding most people have no noticeable side effects.
· U.S. government releases more data on millions of businesses that took pandemic aid
The Trump administration late on Tuesday released the names of more than 10 million businesses and individuals that took pandemic aid, providing more transparency for the programs which officials say have been plagued by fraud and abuse.
The Treasury Department and Small Business Administration (SBA) were forced to release the information on the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) after a federal judge last month sided with a challenge brought by news organizations seeking the data under the Freedom of Information Act.
The two programs were the primary means by which the federal government assisted small businesses hurt by the COVID-19 pandemic, but the Trump administration from the outset had resisted providing full transparency on who got the cash.
“SBA’s historically successful COVID relief loan programs have helped millions of small businesses and tens of millions of American workers when they needed it most,” a spokesperson for the SBA said.
As of November, the SBA had processed and approved more than 5.2 million individual PPP loans amounting to $525 billion, along with 3.65 million EIDL loans worth $194 billion. Several billions of dollars have gone to ineligible businesses and fraudsters, watchdogs have warned.
The SBA in July identified borrowers who took more than $150,000 from the PPP, but provided only aggregated and anonymized data for borrowers who took less than $150,000, which accounted for roughly 85% of the total number of PPP loans. The agency provided similar partial disclosures for EIDL loans.
· Biden says he will not immediately remove Phase 1 trade deal with China: NYT
U.S. President-elect Joe Biden has said that he will not immediately act to remove the Phase 1 trade agreement, which President Donald Trump inked with China, the New York Times reported on Wednesday.
In an interview with a Times columnist, Biden said that the United States needed to get leverage back to use in negotiations with China.
“I’m not going to make any immediate moves, and the same applies to the tariffs,” Biden said. “I’m not going to prejudice my options.”
“In my view, we don’t have (leverage) yet,” he added.
Instead, Biden intends to first review the existing U.S.-China agreement, and develop a “coherent strategy” with traditional allies in Europe and Asia, Thomas Friedman wrote following his hour-long phone call with the president-elect.
“The best China strategy, I think, is one which gets every one of our — or at least what used to be our — allies on the same page. It’s going to be a major priority for me in the opening weeks of my presidency to try to get us back on the same page with our allies,” said Biden, as reported by Friedman on Wednesday.
Beijing wouldn’t welcome a U.S. that gathers a coalition against China, the columnist wrote.
· UK becomes first country to approve the Pfizer-BioNTech coronavirus vaccine for use
The U.K. became the first country in the world to authorize the Pfizer/BioNTech coronavirus vaccine, making it available from next week.
“The Government has today accepted the recommendation from the independent Medicines and Healthcare products Regulatory Agency (MHRA) to approve Pfizer-BioNTech’s COVID-19 vaccine for use,” the government said Wednesday.
“The vaccine will be made available across the U.K. from next week.”
BioNTech, the German biotech that developed the vaccine with Pfizer, said in a statement that the companies are ready to deliver the first doses to the U.K. immediately.
· German retail sales rise more than expected before partial lockdown
German retail sales rose more than expected in October following a drop in the previous month, data showed on Wednesday, suggesting consumers supported growth in Europe’s largest economy before a partial lockdown to contain a second wave of the coronavirus pandemic.
The Federal Statistics Office said retail sales were up 2.6% on the month in real terms after an upwardly revised drop of 1.9% in September. The October reading beat a Reuters forecast for a rise of 1.2%.
· Chinese banks' improved third-quarter earnings show nascent turnaround
Earnings of Chinese banks in the third quarter slipped by a smaller margin than in the prior quarter, signalling a potential turnaround for a sector whose valuations are near five-year lows.
An analysis of 24 major Chinese banks by market capitalisation showed that combined profit fell just 4.8% in the third quarter, compared with a 24% slump in the prior quarter.
Earnings were bolstered by a surge in loan growth and smaller provisions for loan losses, the data showed.
The banks were supported by faster asset growth, which surged to 11% in Q3 2020 from 8.1% in 2019, she said.
Shen Juan, an analyst at Huatai Securities, expects the net profit of listed banks to grow 7.1% year-on-year in 2021, as policy support for smaller firms, private enterprises and the infrastructure sector boost lending.
Shares of Chinese banks have slumped about 7% this year, versus the overall market’s 25% gain.
· BOJ Amamiya: new bank aid wouldn't affect market interest rates
Bank of Japan Deputy Governor Masayoshi Amamiya on Wednesday said he wanted to launch a new scheme to strengthen the regional financial system “as quickly as possible” while brushing aside concern that it might affect market interest rates.
The central bank last month unveiled a plan to pay 0.1% interest on deposits held by lenders that cut costs, boost profits or consolidate, as COVID-19 adds pain to regional banks suffering from years of ultra-low interest rates.
“The chance is very low” that a new system to strengthen regional finances would affect interest rate formation in the market as a whole, Amamiya told an online news conference held after a virtual meeting with business leaders in Akita, northern Japan.
· China may find alternatives sources, but Australian produce can still compete, S&P Global Platts says
Australia is in an unfavorable position in its trade dispute with China, which has found alternative sources like the U.S. for supplies, according to S&P Global Platts.
China is currently importing a lot of produce from the U.S., including wheat, corn and soybeans, Andrei Agapi, Asia-Pacific associate pricing director for agriculture at Platts, told CNBC’s “Squawk Box Asia” on Tuesday.
That buying comes after Beijing agreed to make “substantial purchases” of U.S. manufacturing, agricultural and energy products, along with services, as part of the “phase one” trade agreement between the two economic powerhouses.
The analyst said China has the “potential to buy more” as the country looks to replenish its inventories and reserves. Agapi explained, “There is space for more suppliers, it’s not exclusively a U.S. game.”
One factor driving the appetite for agricultural purchases is China’s recovery from African swine fever, which decimated hog herds in the country and sent pork prices soaring for months until November. The economy has also largely bounced back from the coronavirus. As a result, Agapi said “feed demand is coming online quite aggressively.”
That could bode well for Australia’s farmers, who are emerging from three consecutive years of droughts and are in a “fairly good moment to be competitive” as crop yields improve, Agapi explained. That gives farmers more flexibility to price their produce competitively lower.
· Hong Kong activist Joshua Wong jailed for 13-1/2 months for 2019 anti-government protest
Joshua Wong, 24, one of Hong Kong’s most prominent pro-democracy activists, was jailed on Wednesday for a total of 13-1/2 months after pleading guilty to charges related to unlawful assembly at last year’s anti-government protests.
Wong’s long-time colleagues Agnes Chow, 23, and Ivan Lam, 26, were jailed for a total of 10 and seven months, respectively, after pleading guilty to charges linked to the same siege of police headquarters at the height of the protests in June 2019.
The judge reduced overall jail terms after their guilty pleas.
Their sentences come as critics of the government say it is intensifying a crackdown on the Chinese-ruled city’s wide-ranging freedoms guaranteed when Britain returned it to Beijing in 1997, a charge authorities in China and Hong Kong reject.
· Oil prices slip but traders cheer vaccine approval
Oil prices fell early on Wednesday but later pared some of the losses on news that Britain has become the first country in the world to approve a vaccine for use and that it will be rolled out from early next week.
Prices had been hit earlier by a surprise build in oil inventories in the United States and as OPEC and its allies left markets in limbo by delaying a formal meeting to decide whether to increase output in January.
Brent crude oil futures were down by 8 cents, or 0.2%, at $47.34 a barrel by 0743 GMT, while West Texas Intermediate crude was down by 14 cents, or 0.1%, at $44.41.
Industry data from the American Petroleum Institute showed U.S. crude inventories rose by 4.1 million barrels last week, compared with analysts’ expectations in a Reuters poll for a draw of 2.4 million barrels.
The numbers came after the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, a group known as OPEC+, postponed talks on next year’s oil output policy to Thursday from Tuesday, according to sources.
Reference: CNBC, Reuters
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