· Yen gains, euro squeezed as recovery doubts creep in
The dollar clung to gains on Monday and the Japanese yen edged higher as softening U.S. economic data and rising global coronavirus cases kept investors cautious, while lockdowns and Italian political turmoil held the euro under pressure.
The euro dipped to a six-week low of $1.2066 in Asia and fell to a one-month low of 125.20 yen. The yen was last up about 0.2% at 103.70 per dollar and it also rose on the risk-sensitive Australian and New Zealand dollars.
The Antipodeans were soft against the greenback and the Aussie touched a one-week trough of $0.7679, while the kiwi hit a three-week low of $0.7117.
Better-than-expected Chinese economic data headed off further selling, but was not enough to shift currency traders’ mood.
The safety bid has added another layer of support for the dollar since the Democrats won control of U.S. Congress a fortnight ago, which triggered a surge in yields as investors priced in bigger stimulus from a borrow-and-spend Biden administration.
The mood soured after Friday data showed U.S. retail sales fell for a third straight month in December, stoking worries that the recovery is running into trouble as health authorities warned that the worst of the latest Covid-19 wave might be yet to come.
Europe is also facing surging cases and an Italian government that must survive crucial votes in parliament on Monday and Tuesday in order to cling to power.
The dollar index steadied after touching a one-month high and last traded at 90.827. Sterling on Monday sat near at a one-week low of $1.3567.
Nevertheless, many investors appear to be sticking in crowded dollar shorts, which hit an almost 10-year high last week, even though the bounce has carried the dollar index about 1.9% higher and pushed the euro more than 2% lower in two weeks.
“The market is in a bit of a wait and see mode debating about the dollar, in terms of whether higher U.S. yields could provide support or whether we see further decline,” said Bank of Singapore currency analyst Moh Siong Sim.
“I think the balance of risks is still in favor of a reflationary environment, and therefore risk sentiment should stay positive and we should see a further dollar decline.”
Elsewhere, the Canadian dollar slipped 0.2% after reports that Joe Biden plans to soon rescind permission for the Keystone XL pipeline, a project which would link oil sands in Alberta to refineries in Texas.
Later in the week, President-elect Biden is due to be inaugurated in a heavily-guarded Washington. Tensions are high after mob violence a few weeks ago.
Biden’s pick for Treasury Secretary, Janet Yellen, is expected to rule out seeking a weaker dollar when testifying on Capital Hill on Tuesday, the Wall Street Journal reported.
· China industrial output rises 7.3% year-on-year in December; retail sales miss forecast
China’s industrial output rose at a faster-than-expected rate of 7.3% in December from a year ago, data showed on Monday, expanding for the ninth straight month as the vast manufacturing sector, aided by strong exports, continues its post-COVID recovery.
Analysts polled by Reuters had expected annual industrial output growth to have eased to 6.9% in December from 7.0% in November.
China’s retail sales edged up 4.6% last month from a year earlier, missing analysts’ forecast for 5.5% growth, in contrast to 5.0% growth in November.
Fixed asset investment increased 2.9% in 2020 on year, compared with a forecast 3.2% increase and a 2.5% growth in the first 11 months of the year.
· China to sanction U.S. officials for 'nasty' behaviour over Taiwan
China’s foreign ministry said on Monday it had decided to impose sanctions on U.S. officials who have engaged in “nasty” behaviour over Taiwan, which China claims as its own territory.
Ministry spokeswoman Hua Chunying made the comment in response to a question about U.S. Secretary of State Mike Pompeo’s decision this month to lift restrictions on contacts between U.S. officials and their Taiwanese counterparts.
· Expect Japan’s unemployment rate to fall to 2.7% in 2021: Capital Economics
The impact of Japan’s latest coronavirus measures are likely to be relatively mild on its economy, says Marcel Thieliant of Capital Economics.
· Singapore’s December exports rise 6.8%, beating forecasts
Singapore’s December non-oil domestic exports (NODX) increased 6.8% from a year earlier, official data showed on Monday, due to a rise in shipments of electronics as well as non-electronics such as specialized machinery and non-monetary gold.
The rise followed a 5.0% decrease in November.
Economists had expected a 0.3% increase according to the median of 7 estimates.
On a seasonally adjusted month-on-month basis, exports rose 6.6% in December, extending the prior month’s 3.7% expansion, Enterprise Singapore said in a statement.
Economists had forecast a 3.6% rise.
· UK is vaccinating 140 people per minute on average, minister says
The United Kingdom is vaccinating 140 people per minute against COVID-19 on average, Vaccine Deployment Minister Nadhim Zahawi said on Monday.
The United Kingdom, which has the world’s fifth worst official COVID-19 death toll, is racing to be among the first major countries to vaccinate its population - seen as the best way to exit the pandemic and get the economy going again.
Latest figures show the United Kingdom has vaccinated 3,857,266 people with a first dose and 449,736 with a second dose.
· China reports more than 100 new COVID cases as New Year holiday exodus looms
China reported more than 100 new COVID-19 cases for the sixth consecutive day, with rising infections in the northeast fuelling concerns of another national wave when hundreds of millions travel for the Chinese Lunar New Year holiday.
Tough new controls in the city of Gongzhuling in Jilin province, which has a population of around 1 million people, brings the total number of people under lockdown to more than 29 million.
According to the Global Times newspaper, at least 11 regions in the three provinces of Hebei, Heilongjiang and Jilin have now imposed de facto lockdowns and rolled out extensive testing programmes.
The National Health Commission reported 109 new COVID-19 cases for Jan. 17, unchanged from a day earlier. Of the 93 local infections, 54 were reported in Hebei, which surrounds Beijing.
Northeastern Jilin province also reported a record 30 new cases, underscoring the risk of new clusters emerging.
· Japan PM Suga: Will exhaust all means to protect pandemic-hit medical system
Japanese Prime Minister Yoshihide Suga said on Monday his government will take all possible measures to protect the country’s medical system, as hospitals creak under the strain of the COVID-19 pandemic.
Suga this month issued a state of emergency for Tokyo and three surrounding prefectures in a bid to stem a resurgence of infections. He expanded it to seven more prefectures, including Osaka and Kyoto in western Japan.
· Australia may not open borders in 2021, even with vaccines
Australia may not fully reopen its international borders this year even if most of the population is vaccinated against coronavirus, the head of its health department said on Monday, as the country recorded no new local cases of COVID-19.
Australia is looking at potential adverse effects of the Pfizer vaccine after Norway reported a small number of deaths in older people who received the shot, but is due to begin its immunisation programme next month.
· Brazil clears emergency use of Sinovac, AstraZeneca vaccines
Brazilian health regulator Anvisa on Sunday approved emergency use of Covid-19 vaccines from China’s Sinovac Biotech and Britain’s AstraZeneca, clearing the way for immunizations as the pandemic enters a deadly second wave.
Minutes after Anvisa’s board voted unanimously to approve both vaccines, Monica Calazans, a 54-year-old nurse in Sao Paulo, became the first person to be inoculated in the country, receiving the Chinese vaccine known as CoronaVac.
· India’s massive Covid vaccination drive hits a bump due to app glitch
· Biden may cancel Keystone XL pipeline permit as soon as his first day in office: source
U.S. President-elect Joe Biden is planning to cancel the permit for the $9 billion Keystone XL pipeline project as one of his first acts in office, and perhaps as soon as his first day, according to a source familiar with his thinking.
President Donald Trump, a Republican, had made building the pipeline a central promise of his presidential campaign. Biden, who will be inaugurated on Wednesday, was vice president in the Obama administration when it rejected the project as contrary to its efforts to combat climate change.
· Oil's supply-led rally peters out as virus cases surge
Oil prices on Monday fell further from 11-month highs touched last week, ending a rally that started at end-October on production cuts and strong Chinese demand, with the market’s outlook questioned as coronavirus infections rise.
Brent crude fell 30 cents, or 0.5%, to $54.79 a barrel by 0622 GMT, after dropping 2.3% on Friday. U.S. oil was down by 21 cents, or 0.4%, at $52.15 a barrel, having declined 2.3% in the previous trading session.
Reference: CNBC, Reuters
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