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·         Dollar finds footing on U.S. economy as euro and yen falter

The dollar began the week firmly and within a whisker of milestone peaks against the euro and yen on Monday, as U.S. economic strength and a vaccine rollout proceeding much more quickly than in Europe drew investors into the greenback.

The euro sat at $1.1788, not far above last week’s four-and-a-half-month trough of $1.1762 and well below its 200-day moving average of about $1.1866.

The common currency is heading for its worst month since mid-2019 as Europe’s faltering vaccination program runs into a wave of new infections, a bearish signal as positioning data shows investors remain heavily long euros.

The yen stood just shy of strong resistance and Friday’s 10-month low of 109.85 per dollar to trade at 109.77 early in the Asia session.

The yen is sensitive to gaps in returns on U.S. and Japanese government debt.

This year’s 76-basis-point rise in 10-year Treasury yields - as the U.S. economy rebounds - has opened the gap to its widest since last February. That has drawn Japanese investment, which has in turn helped push the yen down nearly 6% for the quarter.

The U.S. dollar index rose 0.8% to 92.773 and the dollar steadied against the risk-sensitive Aussie, kiwi and sterling, having fallen late on Friday with the positive mood.

Over the quarter the dollar has posted a 0.8% loss on the pound, which has been supported by Britain’s speedy vaccination rollout, a 0.8% gain on the Australian dollar and a 2.7% gain against the kiwi, which has been hit by housing market reforms.

The Aussie was last down 0.1% at $0.7631 on Monday and the New Zealand dollar fell by the same margin to $0.6989, while sterling <GBP=> slipped 0.1% as well to $1.3784.

·         UBS sees the Chinese yuan at 6.25 per dollar by the end of 2021

Kelvin Tay of UBS Global Wealth Management says there is a “limit” to the U.S. dollar’s recent strength.

 

·         United Airlines flies to JFK for the first time since 2015, taking advantage of pandemic lull

United Airlines on Sunday flew to New York’s John F. Kennedy International Airport for the first time in more than five years as the carrier takes advantage of a lull in air travel to snag space at the once-congested airport.

 

·         The Covid downturn may cut Social Security benefits for some. Whether that will be fixed is uncertain

 

·         WHO says COVID likely passed from bats to humans through another animal: AP

 

·         Draft of joint WHO-China study says animals likely source of Covid

A joint WHO-China study on the origins of Covid-19 says that transmission of the virus from bats to humans through another animal is the most likely scenario and that a lab leak is “extremely unlikely,” according to a draft copy obtained by The Associated Press.

The report’s release has been repeatedly delayed, raising questions about whether the Chinese side was trying to skew the conclusions to prevent blame for the pandemic falling on China. A World Health Organization official said late last week that he expected it would be ready for release “in the next few days.”

 

·         China administers over 100m vaccine doses domestically

China's national health authority said over 100 million vaccine doses had been administered domestically by Saturday.

 

·         China warns companies against politicising actions regarding Xinjiang

Chinese officials on Monday said Sweden's H&M (HMb.ST) and other foreign companies should not make rash moves or step into politics after the companies raised concerns about forced labour in Xinjiang, sparking furious online backlash and boycotts.

H&M, Burberry (BRBY.L), Nike (NKE.N) and Adidas (ADSGn.DE) and other Western brands have been hit by consumer boycotts in China since last week over comments about their sourcing of cotton in Xinjiang. The growing rift comes as the United States and other Western governments increase pressure on China over suspected human-rights abuses in the western region.

 

·         China’s government bonds are in a ‘sweet spot’ after sell off, says portfolio manager

Chinese government bonds are in a “sweet spot” after last year’s sell-off — and now offer higher yields and much lower volatility compared to U.S. Treasurys, a portfolio manager said.

The yield on China’s 10-year government bond climbed nearly 1 percentage point last year to a high of around 3.4% in November as the country was “way ahead” in bringing the Covid-19 outbreak under control, said Wilfred Wee, portfolio manager at asset management firm Ninety One on Friday.

Chinese 10-year government bond yield has settled at around 3.2%-3.3% in the last few weeks. In contrast, the 10-year U.S. Treasury yield has hovered around 1.65%-1.75%, even with the recent climb.

“I think in this part of the cycle, China fixed income feels to be in (a) sweet spot,” Wee told CNBC’s “Street Signs Asia.”

 

·         Iran and China sign agreement aimed at strengthening their economic and political alliance

The accord brings Iran into China’s Belt and Road Initiative, a multi-trillion-dollar infrastructure scheme intended to stretch from East Asia to Europe.

China and Iran, both subject to U.S. sanctions, signed a 25-year cooperation agreement on Saturday to strengthen their long-standing economic and political alliance.

 

·         Taiwan says tracks intruding Chinese aircraft with missiles, not always scrambling

 

·         BOJ debated bright signs in economy in March even as it reviewed policy tools

Some Bank of Japan (BOJ) policymakers saw early bright spots in the pandemic-hit economy even as they debated steps to make the bank’s ultra-loose monetary policy more sustainable, a summary of opinions voiced at the March rate review showed on Monday.

At the March meeting, the BOJ decided on a range of steps to make its policy tools sustainable enough to weather a prolonged battle to cushion the economic blow from COVID-19, and fire up inflation to its perennially elusive 2% target.

 

·         Japan's vaccine minister says inoculation pace to accelerate in May

Japan’s vaccine minister, Taro Kono, said on Monday that the pace of coronavirus inoculation in the country would accelerate in May, but that the Tokyo Olympics, set to start in July, were not factoring into the schedule.

 

·         India's coronavirus cases peak over 12 million for first time

India has reported on Monday its worst single-day increase in COVID-19 cases since October, taking the tally to more than 12 million for the first time ever.

A total of 68,020 new coronavirus cases were reported in the last 24 hours, the health ministry said. It was the highest daily rise since Oct. 11, according to a Reuters tally.

 

·         Australia's third-largest city to enter three-day COVID-19 lockdown*

Australian authorities announced a snap three-day COVID-19 lockdown in the northern city of Brisbane from Monday afternoon, as they attempt to stamp out an outbreak of the virulent UK variant of the virus.

 

·         Venezuela's Maduro proposes paying for coronavirus vaccines with oil

Venezuela has received vaccine doses from allies Russia and China. The government and the opposition had been in talks with the Pan American Health Organization (PAHO) over Venezuela’s access to vaccines through COVAX, but the government said last week it would not accept the AstraZeneca PLC vaccine, one of the main inoculations deployed by COVAX in Latin America.

 

·         More Myanmar violence reported as activists seek help from ethnic groups

 

·         Thailand preparing for possible refugee exodus from Myanmar: PM

 

·         Cargo ship blocking Suez Canal has been refloated, says maritime services company

 

·         Oil slumps as Suez Canal container ship starts to move

Oil slumped more than 2% on Monday after news from the Suez Canal that salvage crews have managed to move the giant container ship that has been clogging up the vital global trade passage for nearly a week.

Brent oil was down $1.38, or 2.1%, at $63.19 a barrel by 0511 GMT. U.S. crude fell 1.48 cents, or 2.4%, to $59.49 a barrel.

The stranded container ship Ever Given has almost been completely floated and will be inspected before it is moved, a shipping source with knowledge of the matter told Reuters on Monday.

That market volatility is set to continue, said Jeffrey Halley, senior market analyst at OANDA.

“Given the volatility last week, Brent looks set to move to the lower end of its $60.00 to $65.00 a barrel range,” he said, while U.S. oil is “likely to drop to the lower side of its $57.50 to $62.50 a barrel weekly range.”

Prices are getting some support from expectations that the Organization of the Petroleum Exporting Countries and its allies will maintain lower output levels when they meet this week.

 

Reference: CNBC, Reuters, CGTN