· Sterling gains on Brexit deal optimism; dollar dithers before Fed
The British pound rose against the dollar and euro on hopes that Britain and the European Union will secure a free trade agreement after their decision to extend negotiations beyond the Sunday deadline.
The dollar traded near a 2 1/2-year low against major peers ahead of a U.S. Federal Reserve meeting ending Wednesday where policymakers are expected to increase purchases of longer-dated Treasuries to contain a rise in yields.
The rally in sterling may not last, some analysts warn, because Britain and the EU have repeatedly struggled to narrow their differences and there is still a risk that trade and business will be thrown into chaos without an agreement.
The British pound jumped by 0.7% to $1.3317, its biggest one-day gain since Dec. 1.
Against the euro, sterling rose by 0.5% to 91.07 pence, the largest daily gain since Dec. 9.
The euro edged up 0.2% to $1.2129.
The dollar was little changed at 103.995 yen.
The dollar, which has also been under selling pressure recently, faces a big week because of the Fed’s policy meeting.
U.S. dollar net short positioning in the latest week climbed to its highest since late September, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.
The dollar index against a basket of six major currencies stood at 90.793, close to a 2 1/2-year low.
Investors have sold the dollar on expectations of a global recovery, buoyed by positive coronavirus vaccine news and hopes for further U.S. stimulus that should lift the market’s risk appetite.
The dollar is also under pressure due to expectations that U.S. interest rates will remain low for an extended period.
“The secular trend remains overwhelmingly of U.S. dollar weakness,” Tapas Strickland, a director of economics at National Australia Bank in Sydney, wrote in a research note.
Elsewhere, the Chinese yuan traded at 6.5370 in the onshore market, little changed on the day. In the offshore market, the dollar slipped 0.2% to 6.5237 yuan.
· The Australian dollar is surging on record iron ore prices as tensions with China climb
The Australian dollar has leaped to its highest in more than two years, helped by surging iron ore prices.
Late last week, it surged past 0.75 against the dollar, a high not seen since 2018. The Australian currency had already been shooting higher, rocketing nearly 8% against the dollar since the beginning of this year.
“The AUD continues to leap, trading above 0.7570 during Asia on Friday, helped along by the rise in commodity prices over the past week and the surge in the iron ore price due to a number of factors including weather in Port Hedland,” said Tapas Strickland, director of economics and markets at National Australia Bank. Port Hedland is a town in Western Australia.
Analysts said iron ore prices have climbed as demand from China rises, and have been further buoyed by dwindling supply and disruptions caused by storms hitting Australia, the world’s largest producer.
Iron ore futures on China’s Dalian Commodity Exchange surged by almost 10% on Friday to an all-time high, crossing the 1,000 yuan ($152.95) per ton mark for the first time in history.
· Electoral College will vote Monday, confirming Biden's U.S. presidential win
Electors will gather in state capitols across the country on Monday to formally vote
for Joe Biden as the next U.S. president, effectively ending President Donald Trump’s frenzied but failing attempt to overturn his loss in the Nov. 3 election.
· U.S. vaccine campaign launches with first shipments 'delivering hope' to millions
Cargo planes and trucks with the first U.S. shipments of coronavirus vaccine fanned out from FedEx and UPS hubs in Tennessee and Kentucky on Sunday en route to distribution points around the country, launching an immunization project of unprecedented scope and complexity.
· A Swiss biotech firm developing a Covid treatment has seen its share price soar 38,000% this year
Swiss biotech firm Relief Therapeutics has seen its share price climb by 38,000% so far this year, as it develops a drug focused on respiratory failure arising from severe Covid-19.
Last week, the company, along with U.S. partner NeuroRx, met the 165 patient enrollment target agreed with the U.S. Food and Drug Administration in their ongoing phase 2b/3 trial of RLF-100, which is a patented version of aviptadil.
Aviptadil is a synthetic formulation of a naturally occurring peptide called Vasoactive Intestinal Polypeptide (VIP), which is primarily concentrated in the lungs and works to reset the immune system response along with serving as a vasodilator and boosting the production of surfactant in the lungs, which enables blood oxygen transfer.
Early stage results from expanded access use of RLF-100 in patients suffering with critical Covid-19 and severe comorbidities showed 72% of those admitted into the ICU surviving.
· Moody's says Pfizer's U.S. COVID-19 vaccine authorization is credit positive
Rating agency Moody’s Investors Service said on Sunday that Pfizer Inc’s U.S. COVID-19 vaccine authorization is credit positive.
"The approval is credit positive because of incremental profit and cash flow from sales of the vaccine," Moody's said. "The revenue and profit opportunities for Pfizer are significant because it has priced the vaccine at a profit."
· Britain say Australia trade deal talks 'advancing well'
Britain’s trade talks with Australia are advancing well, Trade Minister Liz Truss said on Sunday, speaking after the latest round of negotiations and with both sides having made initial offers on goods market access.
· Leaders to push Brexit trade talks beyond Sunday deadline
· French central bank trims economic outlook
The French economy will rebound next year as coronavirus restrictions are lifted although not as fast as previously expected, the central bank forecast on Monday.
After contracting about 9% this year, the euro zone’s second biggest economy will post growth around 5% in 2021 and 2022 before easing to slightly more than 2% in 2023, the Bank of France forecast in its quarterly outlook.
The rebound has been knocked back after a second lockdown had to be imposed at the end October following a new outbreak of infections which is gradually coming under control.
Prior to the second wave, the bank had forecast in September a contraction of 8.7% this year and growth of 7.4% in 2021 and 3% in 2022.
· China's new home prices slow in November as market-cooling steps take hold
China’s new home prices grew in November at their slowest monthly pace since March, official data showed on Monday, as policymakers wary of financial risk in the highly leveraged sector continued to pursue market-cooling measures.
The data comes ahead of a slew of economic figures due for release on Tuesday, from which market watchers hope to determine the strength of recovery of the world’s second-largest economy as the coronavirus-blighted year nears an end.
The average new home price across 70 major cities rose 0.1% in November from the previous month, Reuters calculated from National Bureau of Statistics (NBS) data. That compared with 0.2% on-month growth in October.
Prices rose 4.0% in November from the same month a year earlier, the weakest rate since February 2016. That compared with a 4.3% on-year increase in October.
· One key part of China is behind in the economic recovery
China’s gross domestic product is widely expected to expand 2% this year — the only major economy to grow amid a global recession. So far, that growth has come mainly from more traditional industries such as manufacturing, rather than consumer purchases. That’s a concern for a country of 1.4 billion people whose livelihoods Beijing is trying to support through increased reliance on domestic demand.
“What’s a little bit concerning against the backdrop of the economic recovery is still sluggish demand, especially in consumption,” Jianwei Xu, senior economist for Greater China at Natixis, said on a call with reporters Thursday.
He noted that household income has only grown slightly compared with last year. “We still need time to see a full rebound in consumption,” Xu said.
· Japan, South Korea fret as surging coronavirus undermines leaders' support
Japan and South Korea grappled with surging coronavirus cases and growing public frustration on Monday as Japan’s prime minister tiptoed around a contentious travel subsidy programme while an anxious South Korean president warned of harsh curbs.
Japan reported more than 3,000 new cases on Saturday, yet another record as winter set in, with infections worsening in Tokyo, the northern island of Hokkaido and the city of Osaka.
But Japan, with a focus on the economic costs, has steered clear of tough lockdowns. It tackled its first wave of infections in the spring by asking people to refrain from going out and for businesses to close or curtail operating hours.
Across the sea in South Korea, President Moon Jae-in also faces sliding ratings as clusters of new infections fuel criticism over what many see as slack containment.
South Korea reported a new daily record of 1,030 infections on Sunday, a big worry for a country for months held up as a mitigation success story but still a fraction of the tallies being seen in some European countries and the United States, where vaccines are being rolled out.
Few Asian countries expect to get significant amounts of coronavirus vaccines in coming weeks as they manage distribution schedules, allow time to check for any inoculation side effects elsewhere or run their own late-stage trials.
South Korea has warned that coronavirus restrictions may be raised to the highest Phase 3 level, which would essentially mean a lockdown for the first time in Asia’s fourth-largest economy.
In Seoul, schools will close from Tuesday, a step towards the imposition of Phase 3. Last month, the government banned year-end parties.
In Japan, which is hoping to stage the postponed summer Olympics next year, testing has remained relatively low, peaking at about 50,000 in one day recently. Testing in Tokyo, which has the capacity for more than 60,000, is now about 9,000 a day.
· South Korea orders schools to shut as COVID-19 cases spike
· Australian state says work from home is over, but employees still shun office
· Oil prices rise on vaccine hopes, ship explosion at Saudi Arabia
Oil prices rose on Monday, pushing Brent back above $50 a barrel, buoyed by hopes that a rollout of coronavirus vaccines will lift global fuel demand while a tanker explosion in Saudi Arabia jangled nerves in the market.
Brent crude futures for February rose 38 cents, or 0.8%, to $50.35 a barrel by 0454 GMT, while U.S. West Texas Intermediate crude futures for January were up 32 cents, or 0.7%, at $46.89 a barrel.
Prices also extended gains amid supply jitters after a shipping firm said its oil tanker exploded after being hit by an external source while discharging at Jeddah port in Saudi Arabia.
Brent and WTI have rallied for six consecutive weeks, their longest stretch of gains since June.
Reference: Reuters, CNBC
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