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·         Dollar slips as U.S. stimulus hopes lift mood

The U.S. dollar nursed losses on Wednesday and the euro hung on to gains as investors’ mood brightened in the wake of a better-than-expected sentiment survey in Germany and big spending talk from U.S. Treasury Secretary nominee Janet Yellen.

Yellen’s comments, urging lawmakers to “act big” on coronavirus relief and not worry too much about debt, helped assuage this week’s risk averse tone and knocked the dollar index from a one-month high.

The euro bounced off support around $1.2050, lifting about 0.4% on the dollar overnight to hit $1.2145, following a ZEW investor sentiment survey that beat forecasts and the Italian government surviving a confidence vote.

Joe Biden is inaugurated as U.S. President at noon in Washington on Wednesday (1700 GMT), though traders are more focused on his policies than the ceremony.

The safe-haven yen was sold with the improvement in sentiment and briefly eased past 104 per dollar, as well as falling against other major currencies. It last traded at 103.84 per dollar.

Sterling found support from the Bank of England’s chief economist’s prediction that Britain’s economy begins to “recover at a rate of knots” in the second half of the year, and extended overnight gains slightly to $1.3649.

The Chinese yuan clung to modest gains in offshore trade at 6.4757 to the dollar ahead of a monthly interest rate fixing where traders expect no change in either one-year or five-year loan prime rates.

Later on Wednesday Malaysia’s central bank meets, with a decision due at 0700 GMT. Nine of 15 economists polled by Reuters expect it will cut benchmark interest rates to historic lows.

The Bank of Canada is expected to hold rates steady when it announces policy at 1500 GMT.

 

·         Trump ends tumultuous term under cloud, faces uncertain future

 

·         Biden to assume U.S. presidency amid deep division and raging pandemic

Democrat Joe Biden will be sworn in as the 46th president of the United States on Wednesday, assuming the helm of a country beset by deep political divides and battered by a raging coronavirus pandemic.

 

·         Analysis: With a nation in crisis, pressure builds on Biden to deliver

During his presidential campaign, Joe Biden vowed to fight for the soul of America. As he formally assumes office as the next U.S. president on Wednesday, Biden now faces the steep task of repairing a nation’s soul in battered and desperate shape.

Biden wants Congress to move quickly. His team believes the most effective way to lower the political temperature is through results, not rhetoric – specifically, passage of the $1.9 trillion virus relief package that Biden has proposed as a first step in stabilizing the economy, opening schools and ramping up vaccinations nationwide.

 

·         Analysis: Yellen-backed policies set to aid risk assets, raise longer-term worries

Treasury Secretary nominee Janet Yellen’s unequivocal support for a pandemic rescue plan cuts both ways for investors, fueling optimism that the rally in risk assets will continue while bolstering concerns over a massive runup in government debt.

 

'Act big' now to save economy, worry about debt later, Yellen says in Treasury testimony

 

·         Analysis: Stimulus plans fuel Biden trade, but Wall Street wonders if it can continue

As Joe Biden takes over the presidency, investors are trying to determine how much fuel is left in trades betting on his policies, which have sparked outsized rallies in everything from cyclical stocks to shares of solar-powered companies.

 

·         It is ‘optimistic but realistic’ if the Fed tapers in late 2021: Strategist

Brian Jacobsen from Wells Fargo Asset Management says the Fed’s expectation of a strong second half of this year could mean a tapering of its asset purchase program this December, while keeping the interest rate low.

 

·         Trump fraud claims open Republican rift in Texas and other red states

 

·         Virus kills 100,000 in the U.S. in just 36 days, as death toll tops 400,000

 

·         New map shows where China’s latest virus cases are clustered

·         Germany’s vaccine rollout is not going to plan, frustrating officials and experts

Health Minister Jens Spahn had targeted 300,000 inoculations a day, but so far the country has failed to hit that. Data from public health agency, the Robert Koch Institute, published Tuesday showed that in the previous 24 hours, just over 62,000 vaccinations (the majority of which were first doses) were carried out.

In total, since Germany began vaccinations in all its 16 states on Dec.27, almost 1.2 million people in Germany (the priority groups for now are healthcare workers, nursing home residents and staff and the elderly) have received a first dose of the coronavirus vaccine and almost 25,000 have received their second dose.

By contrast, the U.K., which was the first country in the world to approve and rollout the Pfizer-BioNTech vaccine (partly developed in Germany), and then the University of Oxford-AstraZeneca candidate, started its Covid vaccination program earlier in December, has vaccinated over 4 million people so far with their first vaccine dose (over 450,000 have had their second dose), and was exceeding 300,000 vaccinations per day toward the end of last week.

·         Richard Branson hopes Covid vaccination passports will allow for easier air travel

Sir Richard Branson told CNBC on Tuesday he hopes so-called Covid vaccination passports will be available for prospective airline passengers who have been inoculated, potentially allowing them to bypass other virus mitigation measures before traveling.

“Vaccination is everything. Once vulnerable people, in particular, have been vaccinated, I think all kinds of businesses can start opening up again: restaurants, travel companies, cruise companies,” said Branson, who co-founded the airlines Virgin Atlantic and Virgin Australia.

 

·         China holds lending benchmark steady for 9th straight month, matching forecast

China stood pat on its benchmark lending rate for corporate and household loans for a ninth straight month at its January fixing on Wednesday, matching market expectations.

The one-year loan prime rate (LPR) was kept unchanged at 3.85%, while the five-year LPR remained at 4.65%.

 

·         Oil rise on hopes of U.S. stimulus and crude stocks drawdown

Oil prices rose on Wednesday, adding to solid gains overnight, on expectations the incoming U.S. administration will go ahead with massive stimulus spending that would boost fuel demand and draw down crude stocks.

U.S. West Texas Intermediate (WTI) crude futures climbed 37 cents, or 0.7%, to $53.35 a barrel at 0427 GMT, building on a 1.2% rise on Tuesday.

Brent crude futures rose 35 cents, or 0.6%, to $56.25 a barrel, adding to a 2.1% gain on Tuesday.

Traders will be watching out for U.S. crude and products inventory data due from the American Petroleum Institute on Wednesday and from the Energy Information Administration on Friday.

Six analysts polled by Reuters estimated, on average, that crude stocks fell by 300,000 barrels in the week to Jan. 15, but expect gasoline stockpiles rose by 3.0 million barrels. Distillate inventories, which include diesel, heating oil and jet fuel, were seen up by 800,000 bbl.

 

·         OPEC chief pledges to deepen ties with new U.S. administration even as Biden calls for climate action

“We believe that we have established very mutually beneficial productive relationships with the industry in the United States. And I think we have no option but to continue to strengthen this relationship under President Biden,”  the oil cartel’s Secretary General Mohammed Barkindo told CNBC on Tuesday.

Looking ahead, global trends surrounding energy and climate may be worrying OPEC member states far more than whoever is in the White House.

“It is extremely important to understand one thing,” Fatih Birol, executive director of the International Energy Agency, said during the panel. “The share of oil in the global energy markets will decline. And the speed of this decline will be determined by the pace of energy transitions.”

“The bitter truth is that a clean energy transition is coming, and coming very fast,” said Birol.

 

·         TikTok owner ByteDance launches payments in China as it pushes into fintech and e-commerce

 

Reference: CNBC, Reuters