Dollar extends bounce as stimulus hopes stall short bets
The dollar extended a rebound on Monday, as sharp gains in U.S. yields and hopes for more stimulus to boost the world’s largest economy prompted some investors to temper bearish bets, pulling the currency further away from recent multi-year lows.
President-elect Joe Biden, who takes office on Jan. 20 with Democrats able to control both houses of Congress, has promised “trillions” in extra pandemic-relief spending.
That has pushed the yield on benchmark 10-year U.S. debt up more than 20 basis points to 1.1187% this year, which helped the dollar to a one-month high of 104.20 yen Monday as better rates gave pause to some dollar shorts.
The euro last traded as low as $1.2167 in Asia, after climbing as high as $1.2349 last week.
“The underlying source of the revival has been the aftermath of the Senate elections and markets anticipating that we might get substantially more fiscal support for the U.S. economy,” said National Australia Bank’s head of FX strategy, Ray Attrill.
The dollar index has lost roughly 12% since a three-year peak in March. However, it is now more than 1.3% above the almost three-year low it hit last week. It rose 0.1% to 90.418 on Monday.
The dollar rose 0.2% to 6.4864 yuan and it rose 0.6% to two-week high of 1,099.58 South Korean won and hit a two-week peak against the Singapore dollar.
“The weaker dollar narrative and broad-based ebullience for emerging markets have been challenged earlier in the year than we forecast, which may lead to a rethink of consensus trades, at least in the week ahead,” Barclays analysts said in a note.
Elsewhere, China’s factory gate prices fell last month at their slowest pace since February, suggesting the country’s manufacturing sector continues to see a rapid recovery.
Chinese trade figures are due later in the week along with U.S. retail sales, sentiment and production data and markets have a wary eye on Washington as pressure grows to impeach President Donald Trump.
· Nearly $170 billion wiped off cryptocurrency market in 24 hours as bitcoin pulls back
Bitcoin and other digital coins tanked on Monday wiping off some $170 billion from the entire cryptocurrency market.
The market capitalization or value of the cryptocurrency market was $959.53 billion at 12:10 p.m. Singapore time, down from $1.1 trillion a day earlier, according to Coinmarketcap.
Bitcoin, the largest cryptocurrency, fell over 11% from a day earlier to $35,828.06, at around 12:15 p.m. Singapore time. Ether, the second-largest, was down around 15% to $1,126.72.
· Covid killing nearly 3,000 in U.S. every day as CDC warns of ‘surge event’ from Capitol riots
Nearly 3,000 people in the U.S. are dying every day, on average, of Covid-19 as top health officials warn that the worst is yet to come.
The U.S. reported more than 3,400 Covid deaths on Friday, which spurred the seven-day average of daily new deaths to a record-high 2,983, up 19% compared with just one week ago, according to a CNBC analysis of data compiled by Johns Hopkins University.
Daily new cases are soaring to fresh highs, as well. Over the past week, the country has reported an average of more than 247,200 new cases every day, up 27% from a week ago, according to Hopkins data. Dr. Robert Redfield, director of the Centers for Disease Control and Prevention, said Friday the outbreak will get worse before it gets better, echoing comments made earlier this week by Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases.
“We’re going to continue to see mortality in the 2,500-5,000 a day range,” Redfield told the McClatchy news agency in an interview. “This is going to continue to get worse through January, and probably parts of February before we really start to turn the corner.”
With the outbreak growing more severe by the day, officials are racing to quickly distribute life-saving vaccine doses. The initial rollout has been slower than expected, but it’s showing signs of gaining speed. Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, said the distribution effort got off to a slow start partly because of the holidays, but the pace should pick up this month.
The U.S. administered nearly 800,000 shots in 24 hours, the CDC reported Friday, up from about 600,000 the day before and the most in a one-day period so far, according to the agency’s data. More than 22.1 million doses have been distributed, according to the data, but just 6.7 million have been administered.
But states and hospitals are facing some substantial hurdles in administering the vaccine doses. State funding for vaccine distribution was only approved late last month and much of it has yet to trickle down to the facilities that desperately need money to ramp up workforce and digital record-keeping, for example.
· China reports biggest daily COVID-19 case jump in over five months
Mainland China saw its biggest daily increase in COVID-19 cases in more than five months, the country’s national health authority said on Monday, as new infections in Hebei province surrounding Beijing continued to rise.
A county in the northeastern Heilongjiang province on Monday moved into lockdown after reporting new novel coronavirus infections, state television also reported separately.
Hebei accounted for 82 of the 85 new local infections reported on Jan. 10, the National Health Commission (NHC) said in a statement, with Liaoning Province also reporting two new cases and Beijing reporting one new case. The country also saw 18 new imported infections from overseas.
The total number of new COVID-19 cases stood at 103, the highest since 127 cases were reported on July 30.
· China says WHO experts arriving on Thursday to investigate coronavirus origins
· New coronavirus variant first seen in Britain confirmed in Mexico
The new variant of the coronavirus first detected in Britain has been confirmed in Mexico for the first time, health officials in northern Tamaulipas state said in a statement on Sunday, adding a new layer of concern to an already severe national outbreak.
A 56-year-old man who flew on Dec. 29 from Mexico City to the city of Matamoros, just south of the U.S.-Mexico border, tested positive for the new nariant, according to Tamaulipas Health Minister Gloria Molina.
The man was described as an "international traveller," and his name and nationality were not disclosed.
· Pfizer-BioNTech vaccine appears to neutralize a key mutation of Covid variants found in UK, South Africa
A coronavirus vaccine developed by Pfizer and BioNTech appears to be effective against a key mutation in the more infectious variants of the virus discovered in the U.K. and South Africa, according to a study conducted by the U.S. pharmaceutical giant.
· States Prepare Plan For India's COVID-19 Vaccine Rollout On January 16
All the states have started preparing strategy for the inoculation drive ahead of India's coronavirus vaccination drive that will begin January 16. Prime Minister Narendra Modi called the news a "landmark step forward in fighting COVID-19". Delhi became the first state today to announce its schedule for Covid-19 vaccination for health care workers, who will be inoculated in the phase 1 of the vaccination drive.
Priority will be given to around one crore healthcare workers and two crore frontline staff, like doctors, community health workers and police, who are directly involved in fighting the pandemic. The vaccine will be free of cost for this group, Health Minister Dr Harsh Vardhan said last week. The next group will be people over 50, followed by those under 50 but with co-morbidities. Around 30 crore people will be vaccinated in the first phase.
· Philippines signs deal to secure 30 million doses of COVID-19 vaccine Covovax: distributor
The Philippine government has signed a deal to secure the supply of 30 million doses of the COVID-19 vaccine Covovax from Serum Institute of India (SII), the latter’s local partner said on Sunday.
The agreement was signed on Saturday by Carlito Galvez, a former military general in charge of the Philippines’ strategy to fight the coronavirus, according to a statement issued by SII’s local partner, Faberco Life Sciences Inc.
· Democrats in Congress kick off efforts to drive Trump from office after violence at Capitol
Congressional Democrats on Monday begin their drive to force President Donald Trump from office, kicking off a week of legislative action that could end with a vote that would make him the only president in U.S. history to be impeached twice.
· It’s a ‘hard sell’ if Biden administration wants to rejoin massive trans-Pacific trade deal, says analyst
The era of trade liberalization is over, and it will be difficult for the incoming Biden administration to re-join the massive trade deal Trans-Pacific Partnership (TPP), according to an analyst at risk consultancy Control Risks.
The TPP was a mega trade deal negotiated by former U.S. President Barack Obama and 11 other countries, which excluded China. In its original format, the deal — which was inked in 2016 — would have been the world’s largest trade agreement, covering nearly 40% of the global economy.
But the TPP was widely criticized in the U.S., and never passed Congress. President Donald Trump eventually pulled the country out of the mega-trade agreement in 2017.
Dane Chamorro, a partner at Control Risks, said the “desire is probably there” among the new Biden administration to re-join the trade deal.
However, the former U.S. diplomat told CNBC on Monday: “But you have to think that politically, on both sides of the aisle, the idea right now of more trade liberalization is really not very popular.”
· A healthy economy can reduce inequality – but only to a limited extent
The coronavirus pandemic triggered unprecedented economic contractions and job losses, exposing and worsening inequality around the world.
Global extreme poverty is set to rise for the first time in over 20 years, with Covid-19 forcing millions more to live on less than $1.90 a day, according to the World Bank.
David Wilcox of the Peterson Institute for International Economics said economic downturns in the U.S. tend to be “inequality-exacerbating” and that this recession has “unique characteristics.”
He pointed to data which shows that employment rates for high-wage workers have returned to pre-Covid levels. Low-wage employment, however, is still down by nearly 20%.
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But Richard Yetsenga, chief economist of ANZ Bank, said economic growth may not be able to alleviate inequality beyond gains made through job creation.
“Economic growth didn’t solve the equity problem in most economies in the decade before Covid, and so something would need to be different to resolve it afterwards,” he added.
In a research note from November, Yetsenga said giant corporations have been the main beneficiaries of global growth over the past two decades. “But median wages have not increased the way we might have expected, and certainly not in a way that was consistent with historical experience,” he wrote.
Additionally, it is possible that, given the accelerated rate of digital adoption, inequality could worsen as economies progress.
· JPMorgan and Citigroup join U.S. corporations halting political donations after Capitol riot
JPMorgan Chase and Citigroup were among the first major financial firms to say they will pause political action committee donations after followers of President Trump laid siege on the U.S. Capitol last week.
JPMorgan, the biggest U.S. bank by assets, is pausing contributions for both Republicans and Democrats for “at least” the next six months, according to spokesman Steve O’Halloran. The New York-based bank will use that time to consider potential changes to its political-donation strategies.
“The country is facing unprecedented health, economic and political crises,” JPMorgan head of corporate responsibility Peter Scher said in a statement provided to CNBC. “The focus of business leaders, political leaders, civic leaders right now should be on governing and getting help to those who desperately need it most right now. There will be plenty of time for campaigning later.”
Spurred on by the Jan. 6 riots in which five people lost their lives, corporations including Marriott International and the Blue Cross Blue Shield insurance group have said they would stop giving money to Republican lawmakers who backed efforts to disrupt the certification of President-elect Joe Biden’s victory. But banks, rather than targeting and potentially alienating members of the Republican party, have instead moved to halt donations to all lawmakers, for now at least.
· China's export growth seen slowing in December; imports steady: Reuters poll
China’s exports likely grew solidly in December but at a slower pace than in the previous month, as demand from its coronavirus-hit trading partners cooled, while imports held steady, a Reuters poll showed on Monday.
Exports likely rose 15% from a year earlier, according to a median forecast in a Reuters poll of 25 economists, cooling from a 21.1% jump in November.
Buoyant exports helped drive an impressive rebound in China’s manufacturing sector last year, which aided the country’s economic recovery from a coronavirus slump in early 2020.
Imports likely rose 5% in December versus a year ago, the poll showed, still at a moderate pace but marginally higher than 4.5% in the previous month.
Import growth was likely helped by improved construction demand due to ongoing stimulus, and favourable commodity prices, analysts said.
· China’s move to regulate its tech giants is part of its bigger push to become a tech ‘superpower’
China’s recent moves to regulate large technology giants are part of its broader push to become a technological “superpower,” one expert told CNBC.
Like the U.S. and European Union, China is working out how to regulate the technology sector in many areas, from data protection to antitrust. China’s technology companies have grown, largely unencumbered by regulation, and become among the biggest in the world.
And there are a number of regulations that have come into effect or are in the works.
· China’s December factory prices fall at slowest pace in ten months
China’s factory gate prices fell last month at their slowest pace since February, official data showed on Monday, suggesting China’s manufacturing sector continues to see a steady recovery from the Covid-19 shock.
The producer price index (PPI) fell 0.4% from a year earlier, the National Bureau of Statistics said in a statement. The index was expected to fall 0.8%, according to a median forecast in a Reuters poll, after a 1.5% drop in November.
The data comes as manufacturing activity in the world’s second-largest economy expanded in December but at a slightly slower pace amid higher raw material costs.
On a monthly basis, PPI rose 1.1% in December after increasing 0.5% in November, pointing to improving corporate profitability.
Prices for raw materials fell 1.6% from a year ago, compared with a decline of 4.2% in the previous month.
China’s industrial sector has staged an impressive rebound from the coronavirus shock thanks to surprisingly strong exports, helping to fuel a robust economic recovery. But rising global infections - and fresh coronavirus curbs in many countries - may cloud the outlook for Chinese manufacturers.
The consumer price index (CPI) rose 0.2% from a year earlier in December, after easing 0.5% in November, the first fall since October 2009. Analysts in the Reuters poll had forecast a 0.1% rise.
Food prices rose 1.2% from a year ago, compared with a decline of 2.0% in the previous month.
· U.S. plans to designate Yemen's Houthi movement as foreign terror group
The United States plans to designate Yemen’s Houthi movement as a foreign terrorist organization, Secretary of State Mike Pompeo said late on Sunday, a move that diplomats and aid groups worry could threaten peace talks and complicate efforts to combat the world’s largest humanitarian crisis.
The decision to blacklist the Iran-aligned group, which was first reported by Reuters hours earlier, comes as the administration of President-elect Joe Biden prepares to take over from the Trump administration on Jan. 20.
“The Department of State will notify Congress of my intent to designate Ansar Allah sometimes referred to as the Houthis as a Foreign Terrorist Organization (FTO)”, Pompeo said in a statement late on Sunday.
· China condemns U.S. as Taiwan welcomes lifting of curbs on ties
China condemned the United States on Monday for scrapping curbs on interactions with Taiwan officials, saying nobody could prevent the country’s “re-unification”, while Taiwan’s foreign minister hailed the U.S. move as a sign of “global partnership”.
Trump is a popular figure in Taiwan because of his backing for the island, though the government has reassured people that strong ties will not change under Biden, pointing to vigorous bipartisan support for it.
· China says opposes countries meddling in China's domestic affairs
China said on Monday it strongly condemned and firmly opposed meddling in its domestic affairs by the United States, Canada, Britain and Australia, after they condemned the arrest of activists in Hong Kong.
· Oil prices fall on renewed coronavirus concerns as China cases mount
Oil prices fell on Monday, hit by renewed concerns about global fuel demand amid tough coronavirus lockdowns in Europe and new curbs on movement in China, the world’s second-largest oil user, where infections jumped.
Brent crude oil futures were down 65 cents, or 1.2%, at $55.34 a barrel by 0439 GMT, after having climbed to $56.39, their highest since Feb. 25, 2020. Brent rose in the previous four sessions.
U.S. West Texas Intermediate (WTI) slipped 44 cents, or 0.8%, to $51.80 a barrel. WTI rose to its highest in nearly a year on Friday.
Reference: CNBC, Reuters
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