· Sterling holds out hope for Brexit breakthrough in Brussels
Sterling on Tuesday clung to hopes of a meeting between British Prime Minister Boris Johnston and European Commission President Ursula von der Leyen salvaging a Brexit trade deal, while safe-harbor demand gave the dollar support as U.S. virus cases rose.
The British currency was whipsawed as the prospects of Britain and the European Union striking a last-minute deal ebbed and flowed. It shed as much as 1.5% overnight before recouping losses after the leaders’ announced plans to meet in Brussels.
On Tuesday, sterling was on edge but holding on at $1.3353 early in the Asia session, well above Monday’s low of $1.3225.
Other majors had dipped a fraction against the U.S. dollar overnight with a broadly risk-averse mood, though dollar gains were muted as investors overwhelmingly consider it in a downtrend.
The yen held steady at 104.10 per dollar after inching a fraction higher on Monday and the euro was kept firmly above $1.21.
Elsewhere, concern at surging coronavirus cases in the United States tempered optimism about vaccinations and fiscal support for the U.S. economy and provided a bid for dollars.
Against a basket of currencies, the greenback edged higher to 90.890, about half a percent above the two-and-a-half-year low it plumbed on Friday. The Australian and New Zealand dollars took a breather and parked near recent peaks.
Anthony Fauci, the U.S. government’s top infectious disease expert, said mid January “can be a really dark time for us” if gatherings over the forthcoming holiday season spur even greater spread of the virus.
California has shut all but critical infrastructure and retail operations in its worst-hit areas as U.S. Covid-19 infections are at their peak, with an average of 193,863 new cases reported each day over the past week.
The U.S. Congress will vote this week on a stopgap funding bill to provide more time for lawmakers to reach a deal on a bigger Covid-19 relief package.
That could renew dollar selling by improving investors’ appetite for riskier currencies, but after so many false dawns on the stimulus front traders were content to wait and see.
Later on Tuesday business sentiment surveys in Germany and the United States are due and will offer some sense of how deeply the latest wave of Covid-19 has hurt consumers’ mood.
· Biden chooses retired general Lloyd Austin as defense secretary: sources
President-elect Joe Biden has chosen retired General Lloyd Austin, who oversaw U.S. forces in the Middle East under President Barack Obama, to be his defense secretary, two people familiar with the decision said on Monday.
· U.S. Congress to vote on stopgap funding bill as COVID-19 aid talks continue
The U.S. Congress will vote this week on a one-week stopgap funding bill to provide more time for lawmakers to reach a deal on COVID-19 relief and an overarching spending bill to avoid a government shutdown.
Lawmakers in the Republican-led Senate and Democratic-run House of Representatives need to enact a government spending measure by Friday, when funding for federal agencies is set to expire. House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell hope to attach long-awaited COVID-19 relief to a broad $1.4 trillion spending bill, known as an omnibus.
Both sides are under mounting pressure to keep the government open and deliver a fresh infusion of coronavirus aid to families and businesses reeling from a pandemic that has killed 282,000 people in the United States and thrown millions out of work.
· COVID casts long shadow over Colorado economic forecast for 2021
The COVID-19 pandemic is casting a long shadow over attempts to project the strength — or lack thereof — of the Colorado economy moving into the new year.
“This is a really difficult environment to do an economic forecast,” Rich Wobbekind, associate dean and economist at the University of Colorado Boulder Leeds School of Business, said last week in reference to CU’s 56th annual Business Economic Outlook. “We’re dealing with several unknowns, and these are not simple unknowns that you’d typically see when doing a forecast.”
In the longer term, economists are unsure how the pandemic and the resulting societal disruptions will affect consumer behavior.
· Californians endure another lockdown as COVID-19 patients overwhelm hospitals
Most Californians faced heavy new restrictions on Monday aimed at slowing the spread of COVID-19, while New York’s governor threatened to ban indoor restaurant dining in New York City as the United States feared infections would continue skyrocketing.
· 2021 looks better for this year’s laggards: JPMorgan Asset Management
Tai Hui of JPMorgan Asset Management says we may see a pullback in stocks in the near term, but he remains optimistic about risk assets going into 2021 despite a concerning rise in coronavirus infections.
· Bill Gates says six Covid vaccines could be available by spring 2021
Bill Gates has predicted there could be as many as half a dozen Covid-19 vaccines approved and ready for distribution by the spring of 2021, as medical advancements to combat the coronavirus ramp up.
“I expect that we’ll have about six vaccines approved by the first quarter,” Gates said Tuesday, speaking virtually at the Singapore FinTech Festival.
In addition to the already selectively approved Pfizer-BioNTech vaccine, Gates said candidates from Moderna, AstraZeneca, Johnson & Johnson and Novavax would also likely be granted authorization over the coming months. He did not name a sixth vaccine source.
· World Economic Forum to be held in Singapore in May
The World Economic Forum’s annual gathering of political and business leaders will move from Switzerland to Singapore next year as the Covid-19 pandemic would make it challenging to host the event safely in Europe, organizers said on Monday.
· Canada to get first Pfizer COVID-19 vaccine doses before end of December
Canada’s first vaccinations against COVID-19 could begin happening as early as next week, pending Health Canada approval.
Canada will be receiving an initial batch of up to 249,000 doses of Pfizer’s COVID-19 vaccine before the end of December, with the first shipment expected next week. This means people could begin receiving vaccinations, on a priority basis, very soon after.
· British grandma is first in world to get Pfizer vaccine outside trial
Margaret Keenan, a 90-year-old grandmother, on Tuesday became the first person in the world to receive the Pfizer COVID-19 vaccine shot outside of a trial as Britain began vaccinating its population.
· UK's Johnson thanks health workers after COVID vaccine launch
· No-deal Brexit? Little chance, say investment banks
Worries about Brexit trade talks knocked the pound 1% lower on Monday, but investment banks continue to expect Britain and the European Union to reach a deal before the Dec. 31 deadline.
Stubborn differences still stand in the way of a deal before the current transition period expires, and some commentators say the two sides have at best 48 hours to avoid a disorderly parting of ways at the end of this month. Market nerves were evident in the currency as well as options markets.
But analysts and economists at a set of banks canvassed by Reuters throughout this year still see a deal as more likely than not; most respondents are in fact more upbeat about the chances of a deal since they were asked in September.
“The fact that the two sides are still at the table and are not resorting to a high-level blame game suggests that both sides want a deal and believe it can still happen,” Berenberg economist Kallum Pickering said.
He puts the chance of a no-deal exit at 25%.
Rabobank’s UK economist Stefan Koopan sees the probability at 30%, versus 60% in September.
One of the more pessimistic was Peter Dixon at Commerzbank, who assigned a 50:50 chance to either outcome. Even if agreement is reached, “whatever does come out of the negotiations will be a skinny trade deal – that’s the best we’re going to get”, he predicted.
Dixon also said that, although the transition period ends on Dec. 31, there was a “non-zero” probability that implementation of the new rules would be delayed to give businesses more time to adjust.
For Standard Chartered’s Sarah Hewin, the probability of a no-deal outcome is 30%, but she also sees a 20% chance the transition period will be extended, citing the UK government saying in June it wouldn’t introduce full border checks until the second half of 2021.
Analysts highlight the Dec. 10-11 EU leaders’ summit as a possible deadline for a deal to be reached, but Johnson’s spokesman said Britain and the EU would continue negotiating for as long as the two sides have time available and London believes a deal is possible.
· Second U.S. judge blocks Commerce restrictions on TikTok
A second U.S. judge late on Monday granted a preliminary injunction blocking the U.S. Commerce Department from imposing restrictions on Chinese-owned short video sharing app TikTok that would have effectively barred its use in the United States.
· China removes TripAdvisor, 104 other apps from stores under cleansing campaign
China has removed 105 apps including that of U.S. travel firm TripAdvisor Inc from app stores in the country, under a new campaign to cleanse stores of apps it deems spread content related to pornography, prostitution, gambling and violence.
The Cyberspace Administration of China said in a statement on its website on Tuesday that the apps violated one or more of three cyber laws, without providing details for each app.
Reuters' calls to TripAdvisor's Beijing office seeking comment went unanswered.
The authority said it started the campaign on Nov. 5 in response to strong reaction from the general public to content deemed offensive. It said it would continue to regulate apps and remove those in violation of the law in a timely manner.
China heavily regulates its cyberspace and punishments for transgressions are not uncommon, irrespective of whether the app is operated by a domestic or foreign company.
· China foreign minister tells American CEOs he hopes for less U.S. ‘interference’ in Chinese affairs
The U.S. should cease its “interference” in China’s domestic affairs in order to improve relations between the two countries, Chinese Foreign Minister Wang Yi told a group of American business leaders on Monday.
President Donald Trump has pursued a tough policy against China using methods such as tariffs and sanctions. President-elect Joe Biden has said he won’t immediately remove tariffs, but will aim to work with other countries to put pressure on Beijing.
“The most urgent task at the moment is that both sides should work together and remove all kinds of interference, to achieve a smooth transition of China-U.S. relations,” Wang said, according to a CNBC translation of the Chinese text posted on the foreign ministry’s website.
· China is the ‘principal military and economic threat’ in Asia, says Wilbur Ross
China hasn’t done a good job in complying with international trade rules — and is the principal military and economic threat in the region, U.S. Secretary of Commerce Wilbur Ross said on Tuesday.
Speaking on the opening day of the Milken Institute Asia Summit, Ross said China accounts for 210 out of 539 anti-dumping and countervailing duty orders imposed by the U.S. In addition, China makes up a “good portion” of the U.S. entity list that restricts companies’ access to American suppliers for national security reasons, he said.
· Japan’s household spending rebounds from initial Covid hit
Japan’s household spending rose in October for the first time in over a year, government data showed on Tuesday, a sign the economy was gradually emerging from the damage caused by the first wave of coronavirus infections.
But a recent resurgence of infections clouds the outlook for the world’s third-largest economy, keeping policymakers under pressure to support a fragile recovery with massive monetary and fiscal stimulus measures.
Real wages fell in October for the eight straight month, separate data showed, suggesting households are not immune to the hit to corporate profits from the pandemic.
Household spending increased 1.9% in October from a year, falling short of a median market forecast for a 2.5% gain but marking the first rise in 13 months.
The increase was mostly in reaction to a slump in spending in October last year, when households slashed consumption after a sales tax hike that took effect that month.
· Japan's consumer spending recovering but economy not back to pre-pandemic level: econmin
· Japan to compile nearly $200 billion third extra budget: government source
apan’s government will compile a third extra budget for the current fiscal year worth around 20.1 trillion yen ($192 billion) as part of steps to fund a fresh economic stimulus package, a government source told Reuters on Tuesday.
· Taiwan says it faces daily military threats as U.S. notifies of new arms sale
Taiwan faces military threats on a daily basis from “authoritarian forces,” President Tsai Ing-wen
said on Tuesday, as the United States announced a new $280 million arms sale package to the Chinese-claimed island, the sixth this year.
Such sales have riled China, adding to the existing tension between Beijing and Washington, with China placing sanctions on U.S. companies involved and stepping up its military activities near Taiwan, including regular air force missions.
· Farm reforms will benefit majority of the Indian agriculture sector, says country’s top economic advisor
India’s chief economic advisor said Tuesday that the country’s new farm reforms are designed to benefit the majority of the agricultural sector.
Thousands of farmers, mostly from the northern states of Punjab and Haryana, have been protesting against three farm reforms that were enacted into law this year. Those measures are expected to chip away some of the rules that have protected Indian farmers for decades and would subject them to unfettered free-market mechanisms where private players are expected to have a greater role.
· Oil slips as gloom grows over soaring COVID-19 cases, lockdowns
Oil prices fell on Tuesday, adding to losses from the previous session that came as California tightened its pandemic lockdown through Christmas and coronavirus cases continued to surge in the United States and Europe.
Brent crude futures fell 40 cents, or 0.8%, to $48.39 a barrel at 0455 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 35 cents or 0.8%, to $45.41 a barrel. Both benchmark contracts lost around 1% on Monday.
Globally, a sharp rise in coronavirus cases has led to a string of renewed lockdowns, including strict measures in the U.S. state of California as well as Germany and South Korea.
Reference: CNBC, Reuters
Thai
Eng