Forex news for Asia trading for Wednesday 6 January 2021
- Goldman Sachs on why Saudi cut oil production - expect demand to weaken
- Data scientist at The Economists calls both seats for the Democrats
- Looking ahead - US Senate election certification scheduled for Wednesday 1pm local
- Calls being made that Republican incumbent Senator Loeffler has lost
- The FBI is investigating a threat to fly a plane into the US Capitol building on Wednesday
- Japanese Ministry of Finance officials says currency stability is important
- China Caixin/Markit December PMIs Services 56.3 (expected 57.9) and Composite 55.8 (prior 57.5)
- Georgia election update - Democrats appear to be doing better than they did in November
- PBOC sets USD/ CNY reference rate for today at 6.4604 (vs. yesterday at 6.4760)
- FX option expiries for Wednesday January 6 at the 10am NY cut
- Georgia election - polls, prediction markets, favouring Dems to take both wins
- Pence told Trump he does not have the power to change the election result
- Softbank group planning a 100bn yen bond offering
- Japan Jibun Bank/Markit December PMIs Services 47.7 and Composite 48.5
- UK data - BRC Shop Price Index for December: -1.8% y/y (prev. -1.8%)
- Dozens of Hong Kong opposition activists were arrested overnight
- Trump authorised minting of Silver Dollar coins - coins will be no less than 90% silver
- More on Trump's banning transactions with 8 Chinese apps including Alipay
- Trade ideas thread - Wednesday 6 January 2021
- Fed Evans (Q&A) says its very difficult to imagine out of control inflation
- The UK Times says 'millions' more vaccine shots on the way
- Australia Markit December PMIs: Services 57.0 and Composite 56.6
- Trump issues an executive order banning transactions with 8 Chinese software applications
- UK reports that passengers banned from boarding flights to UK without a negative Covid test
- NYSE is considering reverting to its original plan to delist the share of China telcos
- Private oil survey data shows larger draw than was expected in crude oil inventory
- US Treas Sec Mnuchin disagrees with NYSE decision to keep China telcos listed
The focus for the session was well and truly on the runoff election in the US state of Georgia for two US Senate seats. As I post the Democrats look in the box seat to take both of these despite the count so far showing the Republican incumbents slightly ahead. The long-story-short for the expected Dem win is that there are still votes to be counted that are expected to heavily favour the Democratic challengers. The Dems have been doing better than expected throughout counting. Of course, its not over until its over but the odds seem to be firmly favouring the Dems.
The simplistic take on the result is it means a Democrat majority in the Senate (including VP Harris' deciding vote). The more nuanced take is that the majority is so very slim that it is unreasonable to expect Biden to get everything he wants from sometimes recalcitrant Senators.
The current market narrative is that there will be further economic stimulus to come, which could well see rates in the US rise faster than expected and thus weigh on tech stocks, and also that the chances of tax hikes are greater now with a Biden sweep of House, Senate and White House. The numbers are not showing a strong sign of the oft-lauded 'Blue Wave' but its certainly lapping at the shore.
The USD has strengthened marginally during the session, net-net, with currencies lower across the board. Gold, too, is down a touch. The US 10-year yield is on approach to 1%.
USD/JPY was helped higher by some jawboning out of Japan's MoF (see bullets above).
ps. I have not included the blow-by-blow election update posts from Georgia in the list above, just a select few. Scroll through the main page for more if you wish.
And, best wishes to Greg in Arizona who dropped this earlier:
