· British pound jumps as EU reports more progress on Brexit trade deal
Sterling broke through the long-awaited $1.35 barrier on Wednesday morning after European Commission President Ursula von der Leyen said progress had been made toward a post-Brexit trade deal between the U.K. and the European Union.
Addressing the European Parliament, von der Leyen said that while she could not say whether there would or would not be a deal, “there is a path to an agreement now” and the next few days will be critical.
“We have found a way forward on most issues but two issues remain outstanding: the level playing field and fisheries,” von der Leyen said, according to Reuters.
“I am glad to report that the issues linked to governance now have largely been resolved. The next few days are going to be decisive.”
Sterling climbed 0.4% against the dollar following the remarks, breaking above the $1.35 barrier, and the euro also gained 0.4% against the greenback to hover just below $1.22.
· ECB’s Rehn: FX rate not a policy target but has an impact
· Dollar Hit new low 2-1/2 years as U.S. leaders meet on stimulus, pound underpinned by Brexit deal hopes
The dollar hit new low in 2-1/2-year on Wednesday as progress toward a massive U.S. government spending bill and Covid-19 relief measures whetted risk appetite, sapping demand for the safest assets.
The dollar index, which measures the greenback against a basket of currencies, was last at 90.13, after sinking as low as 90.12 on Wednesday, a level not seen since 23 April 2018.
· US imports from China surge in 2020 despite tariffs, pandemic: media
Despite the Trump administration's tariffs on Chinese goods and the ongoing COVID-19 pandemic, U.S. imports from China are surging as the year 2020 draws to a close, The New York Times reported on Monday.
"The surge in imports is another byproduct of the coronavirus, with Americans channeling money they might have spent on vacations, movies and restaurant dining to household items like new lighting for home offices, workout equipment for basement gyms, and toys to keep their children entertained," the report said.
Trade data for the first 10 months of this year, compiled from United States Customs data by IHS Markit, shows that American imports of consumer electronics, masks and other personal protection equipment from China have been strong amid the pandemic, according to the report.
In November, Chinese exports to the United States climbed 46.1 percent to a record 51.98 billion U.S. dollars, the report noted.
· Euro zone business activity stable in December despite Covid lockdowns
Business activity in the euro zone is having a fairly robust December, according to the latest preliminary purchasing manager’s index (PMI) data for the region.
The flash euro zone PMI composite output index, which looks at activity in both manufacturing and services sectors, came in at 49.8 in December, up from 45.3 in November. A reading below 50 still indicates a contraction in business activity, however.
Last month’s reading was already the lowest for the index in six months, and was down from 50 in October.
· German coronavirus deaths hit new high as lockdown starts
Germany entered a strict lockdown on Wednesday in an effort to get soaring coronavirus cases under control as the number of registered deaths from COVID-19 jumped by 952, the highest daily increase yet.
Fears that the pandemic is spiralling out of control in Germany, Europe’s biggest economy, prompted Chancellor Angela Merkel and the 16 state governors to announce on Sunday a tough lockdown until Jan. 10 at the earliest.
· French business slump eased in December as restrictions loosened: PMI
French business activity unexpectedly returned almost to growth this month as some coronavirus restrictions were eased and the manufacturing sector saw a minor rebound, a monthly survey showed on Wednesday.
Data compiler IHS Markit said its preliminary Purchasing Managers’ Index rose to a four-month high of 49.6 from 40.6 in November, beating by a wide margin the 42.9 expected by economists in a Reuters poll.
The surprise improvement brought the index almost to the 50-point threshold that denotes an expansion in business activity rather than a contraction.
· Japan posts record run of export declines on soft U.S., China demand
Japan’s exports fell in November, dashing expectations for an end to the two-year run of declines, largely due to weaker U.S.- and China-bound shipments and suggesting a slower pace of recovery for the world’s third-largest economy.
Ministry of Finance (MOF) data out on Wednesday showed exports fell 4.2% in November from a year earlier, defying the economists’ median estimate of a 0.5% increase in a Reuters poll. It was the 24th straight month of decline, the longest stretch on record, and follows a 0.2% drop in the previous month.
“Overall exports won’t return to pre-virus levels until the middle of next year,” said Tom Learmouth, Japan economist at Capital Economics.
By destination, shipments to the United States contracted for the first time in three months, losing 2.5%, as weak demand for aircraft equipment helped offset higher car exports.
Exports to China, Japan’s largest trading partner, rose at the slowest pace in five months, growing 3.8%, driven by communication devices.
Japan’s cabinet on Tuesday approved a third supplementary budget to fund a fresh $708 billion stimulus package, which includes about 40 trillion yen in direct fiscal spending and focuses on investment in new growth areas such as green and digital innovation.
· Oil prices ease on surprise build in U.S. inventory, demand worries
Oil prices dropped on Wednesday on a surprise gain in crude oil inventories in the United States and as investors continued to worry about demand for fuel being squeezed amid tighter lockdowns in Europe to counter the coronavirus pandemic.
Brent crude futures fell 11 cents, or 0.2%, to $50.65 a barrel at 0421 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 9 cents, or 0.2%, to $47.53 a barrel.
Crude inventories swelled by 2 million barrels in the week to Dec. 11 to about 495 million barrels, according to industry group API. API/S
Reference: Reuters, CNBC
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