· Virus worries buoy dollar, pound swung by Brexit gyrations
The dollar held gains against major peers in holiday-thinned trading on Wednesday as caution about a fast-spreading coronavirus variant in the UK stoked demand for the safest assets.
The pound has fallen for three straight days as time runs out for London to reach a trade deal with Brussels before the UK completes its exit from the European Union at year-end.
The dollar index rose 0.1% to 90.561, extending its gain for the week to 0.7%. That still leaves it on track for a more than 6% decline this year.
Sterling rose 0.1% to $1.3384, seeking to end a three-day slide.
U.S. Congress passed an $892 billion Covid-19 aid package overnight, and vaccine rollouts are gaining momentum.
That development has since been clouded by President Donald Trump’s threat not to approve the stimulus bill, saying it should be amended to increase the amount in the stimulus checks, though this has had little impact on markets so far.
“I don’t know how much of this is posturing by Trump or if he’s really demanding these changes,” said Barclays’ Kadota.
“The muted reaction so far suggest the foreign-exchange market expects the bill to pass in some form.”
At the same time, the new coronavirus variant has introduced new risks to that rosy scenario, even as medical experts have sought to allay people’s fears.
The euro held Tuesday’s 0.7% decline to trade at $1.2166.
The dollar was little changed at 103.63 yen, another traditional haven.
· Trump threntened VETO aids bill, wants $2000 checks
· Bank of England must have 'laser focus' on inflation – Haldane
The Bank of England must have a “laser focus” on keeping inflation expectations in check once the COVID-19 crisis eases, the central bank’s Chief Economist, Andy Haldane, said in an interview with Bloomberg.
“The last thing the world needs right now is a nasty inflation surprise,” Haldane said, echoing comments he made on Nov. 28.
The BoE said on Dec. 17 it is prepared to let inflation overshoot its 2% target temporarily.
· No Brexit trade deal yet as serious issues remain, British minister says
Britain and the European Union have still not clinched a Brexit trade deal as serious issues remain unresolved that prevent Prime Minister Boris Johnson signing up to an accord, a British minister said on Wednesday.
Just eight days before the United Kingdom casts off into the unknown by exiting the EU’s orbit, no trade deal has yet been sealed though an array of conflicting signals indicate, variously, that a deal is imminent or that talks have far to go.
The trade negotiations have broken every deadline that has yet been set, though both sides say they must either reach a deal or part without one by the end of the United Kingdom’s informal EU membership on Dec. 31.
The EU is making a “final push” to strike a trade deal with Britain, although there are still deep rifts over fishing rights, EU chief negotiator Michel Barnier said on Tuesday before meeting EU ambassadors in Brussels.
· German daily COVID deaths toll nears 1,000 a week into lockdown
Germany reported a record daily coronavirus death toll of 962 on Wednesday, a week after the start of a hard lockdown that has forced most stores as well as hair salons and other services to close.
The total death toll now stands at 27,968, data from the Robert Koch Institute (RKI) for infectious diseases showed.
The previous daily death toll record was 952, reported on Dec. 16, the day the lockdown came into effect.
· Truckers can again enter France from UK if test COVID-negative
French and foreign truckers can again enter France from Britain provided they have tested negative for COVID-19 in the 72 hours before entry, the French Transport Ministry said in a statement on Tuesday.
British authorities would provide testing facilities for truck drivers so that they can quickly get their results and drive to France, the ministry said. In the case of a positive test, drivers will have to isolate on British soil for 10 days, with accommodation provided by UK authorities, the statement said.
· COVID-19 is not under control in France, says Paris hospital official
· China's CAS COVID-19 vaccine induces immune response in mid-stage tests
A coronavirus vaccine candidate developed by the Chinese Academy of Sciences (CAS) was found to be safe and triggered immune responses in early and mid-stage trials, researchers said on Tuesday.
· China extends stimulus measures for small businesses — a sign the recovery is not yet complete
More risks for Chinese banks
The question, analysts said, is when authorities should appropriately remove economic support, especially given the persistent spread of the coronavirus in the U.S., U.K. and Europe.
Last week, at an annual meeting for determining the upcoming year’s development priorities, Chinese leaders were generally optimistic, while noting the economic recovery was not fully intact, and that there would be no sudden change in support.
However, such increased involvement with smaller, typically riskier, businesses means Moody’s has a negative outlook on Chinese banks, given the risk of default and the high level of new bad, or non-performing, loans.
· S. Korea to halt flights from Britain until Dec. 31 over new virus strain woes
South Korea said Wednesday it will suspend flights arriving from Britain until the end of this year over concerns about a new strain of the novel coronavirus.
The country's diplomatic missions in Britain will suspend issuing quarantine-waiver documents so as to place all arrivals from the European nation in a 14-day quarantine, according to health authorities.
· Australia’s goods trade surplus hits 2-year lows on China trade tensions
Australia’s trade surplus for goods fell to a two-year low in November hit by a slump in exports to top trading partner China, which imposed a number of restrictions in an escalating trade dispute.
Preliminary data from the Australian Bureau of Statistics (ABS) on Wednesday showed goods trade surplus slipped to A$1.9 billion ($1.43 billion) in November from A$4.7 billion in October.
This is the first time since November 2018 that the goods trade surplus has dropped below the A$2 billion mark.
The drop was led by a A$1.2 billion, or 10%, decrease in exports to China combined with an A$889 million, or 11%, increase in imports from the Asian heavyweight, the ABS said.
China has put a stop on Australian coal while imposing hefty tariffs on a range of farm products including barley, beef, lobsters and wine, angered by Australia’s calls for a global inquiry into the origins of the coronavirus.
Preliminary trade data does not include services. The ABS will release the final trade estimate for November on Jan. 7.
· Oil drops on surprise U.S. stock build, Trump threat to stimulus bill
Oil prices dropped more than 1% on Wednesday after an industry report showed an unexpected rise in U.S. crude oil inventories, and President Donald Trump rattled markets by threatening not to sign a long-awaited U.S. COVID-19 relief bill.
Brent crude futures fell 71 cents, or 1.4%, to $49.37 a barrel at 0646 GMT, while U.S. West Texas Intermediate (WTI) crude futures slid 67 cents, or 1.4%, to $46.35 a barrel. Both contracts fell nearly 2% on Tuesday, already a second straight session of declines.
As well as doubts on the U.S. situation, the oil market remains jittery about the future recovery of demand as a new, highly infectious strain of the novel coronavirus has hit Britain, prompting much of the world to shut its borders to the country.
The American Petroleum Institute (API) reported on Tuesday that U.S. crude inventories have risen by 2.7 million barrels in the week to Dec. 18, compared with analysts’ expectations for a draw of 3.2 million barrels.
Reference: Reuters, CNBC
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