· Dollar’s bounce fades as risk appetite rises
The dollar was headed for its worst week of the year on Friday, as investors cheered in the Joe Biden administration by buying riskier currencies and refreshed bets that a pandemic recovery could push the greenback lower still.
Against the euro, the dollar is down almost 0.8% this week and it touched a week-low of $1.2173 per euro on Friday. The dollar index has fallen by the same weekly margin, and was steady at 90.075 early in the Asia session.
The euro had found some support from the European Central Bank keeping policy steady and accommodative.
Scandinavian currencies have led the charge higher, with the Norwegian crown up 1.8% for the week, helped by Norges Bank’s decision to hold its policy rate steady, albeit at zero. The Swedish crown is up 1.4% for the week.
The risk-sensitive Antipodean currencies have also been gainers, with the Australian dollar up 0.8% and the kiwi climbing more than 1% over the week so far.
Sterling rose to a 2-1/2 year high of $1.3745 overnight on hopes Britain’s vaccine roll-out can usher in a rebound in growth. It held at that level on Friday, up 1% for the week.
The sentiment-driven moves have eroded gains made by the U.S dollar since the Democrats won control of the U.S. Congress earlier this month. The dollar had risen along with U.S. Treasury yields on expectations of more fiscal stimulus and government borrowing under a Biden administration.
The dollar was steady against the Japanese yen on Friday at 103.58, but has lost 0.3% over the week.
A heavy sell-off in Bitcoin saw the cryptocurrency drop 5% in Asia trade on Friday to hit an almost three-week low of $28,800.
Later on Friday, preliminary purchasing managers’ index figures are due across Europe and the United States, and weakness is expected as fresh waves of coronavirus infection have driven new lockdowns and curtailed growth.
· Bitcoin extends slide, heads for worst week since March 2020
Bitcoin fell heavily on Friday and was heading toward its sharpest weekly drop since last March, as worries over its technology and regulation extended a pullback from recent record highs.
The world’s most popular cryptocurrency fell more than 5% to an almost three-week low of $28,800 in the Asia session, before steadying around $30,000. It has lost 15% so far this week, the biggest drop since a 33% fall in March.
Traders said a report posted to Twitter by BitMEX Research here, suggesting that part of a bitcoin may have been spent twice, had hurt confidence in the technology underlying the asset class and also that a pullback was overdue after a huge rally.
· Johnson & Johnson plans to have 100 million vaccines for Americans by spring, board member says
Johnson & Johnson board member Dr. Mark McClellan told CNBC that “if the clinical trial works out,” the company could significantly increase the nation’s Covid vaccine supply availability within the coming weeks.
“I do know that J&J is making a very large supply, going all out with its production, both here in the U.S. and elsewhere around the world, with the goal of having perhaps enough vaccines for 100 million Americans by spring, by this April or so,” said the former FDA Commissioner in a Thursday evening interview on “The News with Shepard Smith.”
· Russia’s Sputnik vaccine gets its first approval in the EU, greenlight from UAE amid ongoing trials
Russia’s Sputnik V Covid-19 vaccine got a series of boosts on Thursday as Hungary and the United Arab Emirates became the first countries in the European Union and Gulf region, respectively, to register the shot for emergency use.
Hungary’s decision was confirmed by President Viktor Orban’s spokesperson, who said that if the country agrees on a shipment deal with Moscow, it will become the first EU country to receive the vaccine. This comes as the country’s cases have fallen from a peak of more than 6,000 per day in early December to below 2,000 per day.
· Hong Kong to lock down district in Kowloon, SCMP reports
Hong Kong for the first time will lock down tens of thousands of residents in a bid to contain a worsening outbreak of the coronavirus, the South China Morning Post reported, citing unidentified people.
The lockdown is expected to begin this weekend in Yau Tsim Mong, the core urban district of Kowloon.
· New China swine fever strains point to unlicensed vaccines
A new form of African swine fever identified in Chinese pig farms is most likely caused by illicit vaccines, industry insiders say, a fresh blow to the world’s largest pork producer, still recovering from a devastating epidemic of the virus.
· Cramer says the hot housing market is a boon, not a red flag, for U.S. economy
· Biden’s team talks tough on China as early signs show policies won’t differ sharply from Trump’s
· Biden seeks five-year extension of New START arms treaty with Russia
U.S. President Joe Biden will seek a five-year extension to the New START arms control treaty with Russia, the White House said on Thursday, in one of the first major foreign policy decisions of the new administration ahead of the treaty’s expiration in early February.
· Too early to say when Covid lockdown will end, says British PM Boris Johnson
· Euro zone business activity shrinks again as new Covid strains lead to more lockdowns
Business activity in the euro zone fell to a two-month low in January, preliminary data showed on Friday, on the back of stricter coronavirus-related lockdowns.
The region is grappling with growing Covid-19 infection rates and tighter restrictions as new strains of the virus spread, causing further economic pain.
Markit’s flash composite PMI for the euro zone, which looks at activity across both manufacturing and services, dropped to 47.5 January, versus 49.1 in December. A reading below 50 represents a contraction in activity.
· JPMorgan pushes out Turkey rate cut expectation to third quarter
A more hawkish tone from Turkey’s central bank at Thursday’s policy meeting means it will now likely deliver a first cut in interest rates in the third quarter rather than the second and trim less overall, JPMorgan said in a research note.
“The emphasis on tight policies for an extended period of time suggests that the CBRT (central bank) is still not confident on the disinflation process and is determined to build further credibility,” JPMorgan’s Yarkin Cebeci said in a note to clients, predicting a cut for July.
· Japan December factory output, retails sales seen falling in blow to GDP outlook: Reuters poll
Japan’s industrial production likely declined again in December and retail sales are also expected to have slipped, a Reuters poll found, reinforcing worries a recent sharp increase in COVID-19 cases could derail a fragile economic recovery.
The world’s third-largest economy has rebounded from its biggest postwar slump last year, but a resurgence in local and overseas coronavirus infections is raising the prospect of a prolonged period of subpar growth.
The nation’s factory output is expected to have declined 1.5% in December from the previous month, the poll of 18 economists showed on Friday, deepening from a 0.5% fall in November.
· Japan's consumer prices fall at decade-fast pace, add to deflation fears
Japan’s core consumer prices slumped in December at the fastest annual pace in a decade, a sign of intensifying deflationary pressures that sharpen the case for the central bank to come up with better ways to combat the deepening impact of the COVID-19 pandemic.
Friday’s weak data underscores the challenges policymakers face in preventing the spread of the virus without adding to the strain on an economy already suffering from a renewed state of emergency rolled out this month.
The nationwide core consumer price index (CPI), which includes oil but excludes fresh food costs, fell 1.0% in December from a year earlier, government data showed, slightly less than a median market forecast for a 1.1% drop.
It was the biggest annual fall since September 2010, when Japan was grappling with grinding deflation and a spike in the yen that dealt a severe blow to the export-reliant economy.
· Japan stands firm on Tokyo Olympics schedule, denies report of cancellation
· Middle East leaders praise Trump’s ‘maximum pressure’ campaign on Iran as Biden takes office
Leaders in the Middle East threw their weight behind the “maximum pressure” campaign against Iran, just days before U.S. President Joe Biden took office this week.
The United Arab Emirates said it was “absolutely” in favor of continuing to pressure Iran — a policy by the Trump administration aimed at forcing the regime to halt its nuclear activities and cut off support for militants in the Middle East.
Israel’s energy minister said the campaign has been “very productive,” while the deputy mayor of Jerusalem said it is the “only thing” that will work.
Biden is widely expected to take the diplomatic route, in contrast with his predecessor Donald Trump, who slapped heavy economic sanctions on Iran after withdrawing from the 2015 nuclear deal. One analyst told CNBC in November that the two presidents are “as stark as black and white” when it comes to enforcing maximum pressure on Tehran.
· Top Iran leader posts Trump-like golfer image, vows revenge
The Twitter account of Iran’s Supreme Leader on Friday carried the image of a golfer resembling former President Donald Trump apparently being targeted by a drone, vowing revenge over the killing of a top Iranian general in a U.S. drone attack.
· Oil prices fall as China’s surging COVID-19 cases trigger clampdowns
Oil prices dropped on Friday, retreating further from 11-month highs hit last week, weighed down by worries that new pandemic restrictions in China will curb fuel demand in the world’s biggest oil importer.
U.S. West Texas Intermediate (WTI) crude futures dropped 53 cents, or 1%, to $52.60 a barrel at 0445 GMT, after slipping 18 cents on Thursday.
Brent crude futures fell 45 cents, or 0.8%, to $55.65 a barrel, erasing a 2 cent gain on Thursday.
Recovering fuel demand in China underpinned market gains late last year while the United States and Europe lagged, but that source of support is fading as a fresh wave of COVID-19 cases has sparked new restrictions to contain the spread.
“Indeed, investors are struggling to see through short-term pain for long-term gain heading into the weekend as COVID case counts in China are the most significant demand concern for traders,” Axi chief market strategist Stephen Innes said in a note.
The commercial hub of Shanghai reported its first locally transmitted cases in two months on Thursday, and Beijing is urging people not to travel during the upcoming Lunar New Year holiday, when tens of millions of urban workers typically head back to their villages.
A seasonal boost to China’s gasoline demand that is typically seen during the New Year holidays will be moderated by the tightened restrictions this year, consultancy FGE said in a note.
The market is awaiting official oil inventory data from the U.S. Energy Information Administration on Friday, after industry data on Wednesday showed a surprise 2.6 million barrel increase in U.S. crude inventories last week compared with analysts’ forecasts for a 1.2 million barrel draw.
· Surging fuel demand drives up India’s crude oil processing in December
India’s crude oil processing last month registered its first year-on-year gain since February 2020, driven by a surge in demand for fuels as economic activity continued to pick up from a coronavirus-induced slump.
Crude oil throughput in December rose 0.9% year on year to 21.02 million tonnes (4.97 million barrels per day), provisional government data showed on Thursday.
At the heart of the pick-up in crude oil processing, fuel consumption rose 4.1% to 18.6 million tonnes in December, its highest since January 2020.
Reference: CNBC, Reuters, The Economic Times
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