· Dollar holds advantage over low-yielders, risk currencies slip back
The dollar stood firm against its low-yielding peers on Tuesday on bets of a faster economic recovery in the United States and expectations that the U.S. Federal Reserve will show greater tolerance of higher bond yields than other central banks.
Risk sensitive currencies stepped back from sharp gains the previous day, as China’s top financial regulator discussed the need to proactively take measures to stabilise the housing market, while expressing wariness of the risk of bubbles bursting in foreign markets.
The dollar index rose 0.2% to 91.176, hitting a three-week high to edge closer to its February peak of 91.600.
The U.S. currency rose to as high as 106.93 yen, its highest since late August, and last stood at 106.78 yen while the euro dipped 0.2% to $1.2026, touching its lowest level in almost a month.
The euro was under pressure as top officials from the European Central Bank sounded alarm over rises in bond yields.
· President Christine Lagarde said the ECB will prevent a premature increase in borrowing costs for firms and households.
· Policymaker Francois Villeroy de Galhau was even more explicit, saying some of the recent rises in bond yields were unwarranted and that the ECB must push back using the flexibility embedded in its bond purchase programme.
· Traders were quick to sense the marked difference in tone between the ECB and the Federal Reserve.
· Richmond Federal Reserve President Thomas Barkin said on Monday the uptick in long-term bond yields so far seems to suggest an adjustment to stronger growth and inflation outlook.
· Atlanta Fed President Raphael Bostic said last week that bond yields remain comparatively low.
· Federal Reserve Chair Jerome Powell has not appeared unduly concerned by rising bond yields.
· “Central banks continue to take diverging views on the signals sent by the recent rise in yields. The U.S. Fed is taking it as a positive signal,” Tapas Strickland, director of economics and markets at National Australian Bank in Sydney, said in a note.
· Moves in U.S. Treasury market are showing an ‘increasing risk of inflation’: The Global CIO Office
Johan Jooste of The Global CIO Office says the recent moves in the bond space may have represented “a little scenario of how things might be” if yields move quickly.
· Bitcoin also jumped back in tandem with gains in risk assets, trading at $49,129 and pulling away from Sunday’s three-week low of $43,021.
· A major Chinese bitcoin mining hub is shutting down its cryptocurrency operations
China’s Inner Mongolia region plans to ban new cryptocurrency mining projects and shut down existing activity in a bid to cut down on energy-consumption.
· CDC says J&J Covid vaccine is OK for people who have allergic reaction to Pfizer’s or Moderna’s
· Novavax expects FDA clearance for Covid vaccine as early as May, CEO says
· U.S. downplays possibility of sharing COVID-19 vaccines with Mexico
· China, U.S. should lift COVID-19 travel bans if herd immunity reached, Chinese epidemiologist says
China and the United States should remove all barriers to travel between the two countries if the United States achieves herd immunity for COVID-19 with 90% of its population vaccinated, potentially by August, a Chinese epidemiologist has said.
As of Sunday, 15% of the U.S. population has received at least one dose of a vaccine.
“By August it could be reach 90% to reach herd immunity, so if that’s the case, if we could remove all political barriers, just based on the science, the two countries could possibly be the first two countries to remove all barriers for free travel,” Wu Zunyou, chief epidemiologist of China’s Center for Diseases Prevention and Control, said on Monday.
· China aims to vaccinate 40% of population by end-July: senior adviser
China aims to vaccinate 40% of its population against COVID-19 by the end of July, a senior health adviser told Reuters on Tuesday, requiring a significant increase in inoculations even as it ramps up exports of vaccines.
· As economy rebounds, China parliament to address long-term pitfalls
China’s annual session of parliament will chart a course for economic recovery and unveil a five-year plan to fend off stagnation, as strategic rivalry with the United States spurs a shift to reliance on consumption and home-grown technology.
On the same day, China will also release its 14th five-year plan, a blueprint for 2021-2025 that calls for quickening reforms to unleash fresh growth drivers and make the economy more innovative. Sources have said a goal of the plan will be to achieve economic growth averaging around 5%.
China may also set electoral reforms in Hong Kong, where Beijing has been tightening its grip since imposing national security legislation last year after months of unrest in 2019. The reforms will reinforce Beijing’s ambition to have the Chinese territory run by “patriots”, and would further marginalise pro-democracy candidates.
· China considers ways to manage financial risks stemming from capital inflows
China’s top banking and insurance regulator expressed wariness of the risk of bubbles bursting in foreign markets, and said Beijing is studying effective measures to manage capital inflows to prevent turbulence in the domestic market.
Global markets are starting to see side effects of fiscal and monetary policy steps in response to the COVID-19 pandemic, said Guo Shuqing, head of the China Banking and Insurance Regulatory Commission, at a news conference on Tuesday.
· Chinese fintech platforms expected to meet capital requirements within 2 years-regulator
· China’s most important chipmaker SMIC could be a big winner from the global semiconductor shortage
· Taiwan opposition chief in no rush for China meeting
The leader of Taiwan’s main opposition party the Kuomintang (KMT) said on Tuesday he is in no rush to travel to China to meet President Xi Jinping, and that Beijing’s proposals to get Taiwan to accept Communist rule had “no market” on the island.
· Biden’s team says it will use ‘all available tools’ to fight China’s unfair trade practices
President Joe Biden’s team will use “all available tools” to fight China’s unfair trade practices, according to a report outlining the new U.S. administration’s trade agenda.
The document released on Monday did not specify the tools that the administration will use, but it formalized statements made by Biden and members of his team in the last few months on how they will handle China and other trade priorities.
· Tax hikes, furlough extensions and a hawkish tone: Analysts’ predictions for the UK budget
British Finance Minister Rishi Sunak prepares to set out the country’s economic path to recovery, analysts are weighing the possibility of tax hikes and a nod to future fiscal tightening.
The budget, due on March 3, comes as nationwide Covid-19 restrictions are set to be gradually unwound over the coming months, culminating in full removal on June 21. Meanwhile, more than 20 million people in the U.K. have now received a first vaccine dose.
Sunak told the BBC over the weekend that his budget will “provide support,” but cautioned that the “shock to the economy” would not be a quick fix.
· Former U.S. ambassador doesn’t see Iran nuclear deal happening this year as escalations mount
· Myanmar police fire stun grenades as Southeast Asian ministers aim for talks
Myanmar police opened fire to disperse protesters on Tuesday, witnesses said, as foreign ministers of neighbouring countries were due to hold talks with the military in a bid to quell violence and find a way out of the crisis.
Reference: CNBC, Reuters
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