· Dollar drops as progress on U.S. stimulus, Brexit deals sour safety bid
The dollar set fresh 2-1/2-year lows against major peers including the British pound and euro on Thursday as progress toward agreeing a U.S. stimulus package and a Brexit deal boosted risk appetite at the expense of the safest assets.
Congressional negotiators were “closing in on” a $900 billion COVID-19 aid bill, lawmakers and aides said on Wednesday, with the tone the most positive it’s been in months.
Across the Atlantic, the European Union’s chief executive said a deal with the UK was nearer, although success wasn’t guaranteed.
The dollar index sank as low as 89.97 in Asian trading, breaking below 90 for the first time since April 2018.
The euro changed hands at $1.22305, after earlier reaching $1.2235, also the strongest since April 2018.
The pound bought $1.3557 having risen to $1.3564 for the first time since May 2018.
The Federal Reserve on Wednesday vowed to keep funnelling cash into financial markets until the U.S. economic recovery is secure, a promise of long-term help that fell short of some investors’ hopes of an immediate move to shore up a recent pandemic-related slide.
The dollar index jerked higher after the Fed’s announcement, but the respite was short-lived.
“The U.S.’ long-term yield is too low to finance its current account deficit,” said Minori Uchida, chief currency strategist at MUFG Bank in Tokyo.
“As long as U.S. long-term yields stay at very low levels, the dollar will be weaker,” with scope to fall by as much as 10% against rivals like the euro, yen and Chinese yuan, he said.
The greenback slid to 103.280 yen, also a safe haven currency, and Uchida said it could break 100 by March.
The onshore yuan traded at 6.5369 per dollar, while its offshore counterpart changed hands at 6.5117, near the 6.4975 level it reached earlier this month for the first time since June 2018.
Meanwhile, the Swiss franc was little changed after touching a six-year high of 0.8826 per dollar on Wednesday, when the U.S. Treasury labeled Switzerland a currency manipulator.
The Australian dollar touched 75.975 U.S. cents, the highest since June 2018. Its New Zealand peer reached 71.41 U.S. cents, a level unseen since April 2018.
Bitcoin traded as high as $22,394 after smashing through the $20,000 barrier for the first time overnight.
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· U.S. Treasury labels Switzerland, Vietnam as currency manipulators
The Trump administration labeled Switzerland and Vietnam currency manipulators on Wednesday, in another parting shot at trading partners that could complicate matters for U.S. President-elect Joe Biden’s incoming team.
In a long-overdue report, the U.S. Treasury also added India, Thailand and Taiwan to a list of countries it says may be deliberately devaluing their currencies against the dollar.
The Covid-19 pandemic has skewed trade flows and widened U.S. deficits with trading partners, an irritant to outgoing President Donald Trump, who won office four years ago partly on a promise to close the U.S. trade gap.
· United States hopes for trade deal with UK, Trump's trade chief says - BBC
The United States is hopeful of sealing a mini-trade deal with the United Kingdom to reduce tariffs, President Donald Trump’s trade chief, Robert Lighthizer, told the BBC.
Lighthizer said he was hopeful for a deal that could see punitive tariffs on Scottish whisky lowered, the BBC said.
He also suggested the UK would need to go further than last week’s announcement breaking with the EU’s support of European plane maker Airbus, the BBC said.
Britain will suspend retaliatory tariffs imposed on U.S. goods as part of a dispute over aircraft subsidies from Jan. 1, the first step to diverging from European Union trade policy.
· FDA says extra doses from vials of Pfizer’s Covid vaccine can be used
The U.S. Food and Drug Administration said on Wednesday that extra doses from vials of Pfizer’s Covid-19 vaccine can be used after reports of vaccine doses being thrown away by pharmacists due to labeling confusion.
Stat News reported earlier that hospital pharmacists found themselves in the position of throwing away one in every six doses of the first Pfizer-BioNTech Covid-19 vaccines distributed this week in the United States because of the confusion over labeling.
The Pfizer vials are supposed to hold five doses, according to the labeling, but media reports said pharmacists had found a way for a sixth or even a seventh dose. Without clear approval from the manufacturer, the extra dose had to be discarded.
· European new car sales drop by 13.5% y/y in November - ACEA
European car registrations dropped in November, declining for the second month in row, industry data showed on Thursday, as measures to restrict a second coronavirus wave hit sales in the continent’s largest markets.
In November, new car registrations dropped by 13.5% year-on-year to 1.05 million vehicles in the European Union, Britain and the countries of the European Free Trade Association (EFTA), figures from the European Automobile Manufacturers’ Association (ACEA) showed.
· Taiwan says hopes to cut trade surplus after U.S. currency move
Taiwan hopes to cut its trade surplus with the United States to address U.S. concerns about the Taiwan dollar’s exchange rate, the island’s central bank said on Thursday.
· Tokyo says COVID-19 strain on hospitals is severe, raises alert to highest
The Japanese capital of Tokyo said on Thursday the strain on its medical system from the COVID-19 pandemic was severe, raising its alert level to the highest of four stages as the number of cases spiked to a record daily high of 822.
A health official said it had become difficult to balance the care of COVID-19 patients with regular ones as hospital beds filled up, assigning a “red” alert for medical preparedness for the first time.
· S.Korea reports record coronavirus deaths as lockdown fears spark panic buying
South Korea reported a record number of coronavirus deaths on Thursday as the country’s biggest wave of infections since the start of the pandemic strained hospital resources and sparked panic buying in anticipation of a harsh new lockdown.
The novel coronavirus had claimed another 22 lives as of midnight on Wednesday, sharply up from a previous high of 13 deaths in a single day earlier in the week, the Korea Disease Control and Prevention Agency (KDCA) reported.
· Covid vaccines will bring recovery in 2021 — but it won’t be ‘business as usual,’ says Singapore minister
The rollout of Covid-19 vaccines in Singapore will help the economy to recover — but will not take it back to what it was before the pandemic, the country’s Minister for Foreign Affairs Vivian Balakrishnan said on Thursday.
“I think we should talk about a new normal. So yes, there will be recovery in 2021, the question is to what extent that bounce back will be. But it will be a fallacy, it will be very dangerous to assume we’re going to go back to business as usual,” Balakrishnan told CNBC’s “Squawk Box Asia.”
· Australia’s unemployment rate in November drops to 6.8 per cent
ustralia’s unemployment rate has fallen to 6.8 per cent, with 90,000 new workers finding jobs during the month of November.
Latest labour data from the Australian Bureau of Statistics reveals the majority of new jobs were picked up in Victoria, with the southern state adding 74,000 new positions.
· Oil prices climb to nine-month high after inventory draw
Oil climbed to a nine-month high on Thursday after government data showed a fall in U.S. crude stockpiles last week, while progress towards a U.S. fiscal stimulus deal and strong Asian demand also buoyed prices.
The U.S. dollar also set a 2-1/2-year low against major rivals on Thursday. Oil prices generally rise when the dollar falls because crude priced in the greenback becomes cheaper for buyers holding other currencies.
Brent crude futures rose 72 cents, or 1.4%, to $51.80 a barrel at 0744 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose by 71 cents, or 1.5%, to $48.53 a barrel. Both benchmarks hit their highest since early March.
U.S. crude inventories fell by 3.1 million barrels in the week to Dec. 11, the Energy Information Administration said, more than analysts’ expectations of a 1.9-million-barrel drop.
Reference: Reuters, CNBC
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