The US dollar ended a volatile 2020 down 6.5% against a basket of currencies, underlining the dramatic turnaround in risk appetite from the depths of the March virus crisis. That risk rally is showing no sign of abating anytime soon, driving bearish bets against the dollar to near-decade highs. Nevertheless, the dollar’s negative outlook is becoming increasingly murky as the US economy is poised to outperform its peers in 2021. In view of this, can America’s soaring current account and [..]
The Covid-19 pandemic has stigmatized China as the birthplace of one of most awful diseases in modern history. But it is not all black for the second biggest economy in the world, although challenges remain, as its successful handling of the virus has likely marked another positive quarter in the end of 2020 at a time when new lockdown measures are prolonging growth agonies in the rest of the world. Covid-19, a national pride China’s Communist governing party had a tough year, receiving words [..]
It’s only been a couple of weeks since outgoing US President Trump signed a $900 billion stimulus bill into law, but investors already have their sights on another, even bigger fiscal package. The Democrats’ double win in the Georgia runoffs has handed the party control over both houses of Congress, providing President-elect Joe Biden a strong mandate to deliver on his spending pledges. The unexpected victory has sent long-term Treasury yields soaring, as the additional stimulus is likely to significantly [..]
Britain and the European Union have just agreed on a post-Brexit relationship – including, of course, on trade – ending more than four years of uncertainty and political drama. However, with negotiators having less than 12 months to strike a deal, it was never going to be possible to achieve anything more than a bare minimum accord. Thus, those hoping that the world can now finally move on from the Brexit soap opera may be disappointed to learn that there [..]
It’s been an incredible year for commodities as the global pandemic has induced some historic moves in the prices of key commodities such as gold and oil. Growth commodities like oil and industrial metals, whose fortunes are more directly tied to economic performance, have rallied hard since March when markets were flooded with stimulus and look set to finish 2020 on a positive note. The safe-haven gold, which had been on the rise long before the pandemic, has not been [..]
It’s been a roller-coaster year for the commodity-linked dollars of Canada, Australia and New Zealand as the global pandemic has wreaked havoc on international trade and on commodity prices – the lifelines of the three economies. But as countries around the world make progress towards recovering from the once-in-a-generation crisis, Australia and New Zealand seem poised to bounce back the quickest. Canada’s recovery may be slightly shakier due to its over dependency on the United States and oil exports. But [..]
Crude oil staged a heroic rally lately, with the vaccine news acting as jet fuel for prices. Investors are finally pricing in a brighter outlook for demand next year, but that is only half of the equation. The other half is what the supply side will look like, so crude’s fate now lies in OPEC’s hands, which will meet on Monday to decide whether to extend its production cuts. A three-month extension seems fully priced in by now, so if [..]
The Japanese yen has been on a steady downtrend against most of its major peers since March when it exploded higher during the virus-induced financial turmoil. Although only the euro and the Australian dollar have managed to erase their year-to-date losses, the gap for the remaining currencies isn’t too great. The pound is down about 3.5% and the Canadian dollar still needs to recoup around 4.5%. So the US dollar’s decline of a similar amount to the loonie’s doesn’t come [..]
A combination of cheap money policies and runaway government spending propelled gold prices to new record highs earlier this year, but the metal has been trapped in a range for three months now, and the burning question is whether bullion’s best days are behind it now that a vaccine is on the radar. Maybe not. The ‘reflation’ trade could dominate next year, and central banks are unlikely to allow bond yields to move higher from here, setting the stage for [..]
Trump’s presidency opened several fronts of confrontation between the United States and other key global economic powers, instantly increasing volatility in the markets as traders love to trade. With Biden ready to pick up the torch now, questions are arising over whether he could raise the flag of peace and build stability. However, his recent political shift suggests that the “America first” nationalism may not be easily replaced, and some battles may not see a ceasefire soon. No majority, no control Without majority in the [..]
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