LOCKDOWN LEVEL 1 Ver4 [DAY 4] Wave 2
TOTAL DAYS 269 – 07 HOURS 40 MINUTES
By the close of trade on Thursday, the South African rand strengthened against the US dollar.
- The greenback lost ground, amid hopes of additional coronavirus relief aid and following the Fed’s pledge to keep interest rates low. With time running out on a loan program that had seen little use so far, U.S. small- and mid-sized businesses are tapping into the Federal Reserve’s Main Street Lending Program at a record pace. Businesses drew nearly $2.7 billion in loans under the program in the week ended Dec. 16, Fed data released on Thursday showed. That was more than double the next highest weekly amount – about $1 billion – drawn the previous week and brings total Main Street loans outstanding to $10 billion. The program is one of several emergency credit facilities the Fed, set up to cushion the economic blow from the COVID-19 pandemic
- On the data front, the number of people filing first-time claims for jobless benefits unexpectedly rose for the week ended 11 December, as a relentless wave of new COVID-19 infections adversely affected business operations, offering more evidence that the economy’s recovery from the pandemic recession was faltering.
- Meanwhile, the Philadelphia Fed manufacturing index fell in December. In contrast, the pace of building permit applications for November reached the highest level in 14 years, indicating sustained housing market strength, even as the broader economic recovery is slowing amid a resurgence in new COVID-19 cases.
- Swiss National Bank President Thomas Jordan has rejected a U.S. decision to label Switzerland a “currency manipulator.” The U.S. Treasury on Wednesday added Switzerland to a list of nations it suspects of deliberately devaluing their currencies against the dollar. Jordan told CNBC on Thursday that neither the SNB nor Switzerland itself has artificially manipulated the value of the Swiss franc.
The yield on benchmark government bonds fell yesterday. The yield on 2026 bond dropped to 6.73%. Further, the yield on 2023 bond declined to 4.63%, while that for the longer-dated 2030 issue fell to 8.69%.
In early trade on Friday, the US dollar is trading higher against the South African rand at R14.6988, while the euro is trading higher at R17.9966. At 06:00 The British pound has marginally declined against the South African rand to trade at R19.8762.
By the close of trade on Thursday, the euro advanced against most of the major currencies.
- The European Union has agreed “in principle” to an investment agreement with China, a high-level diplomatic source in Brussels told the South China Morning Post on Thursday, in what would be a big win for Beijing in the face of tattered relations with the US. The EU’s two most influential leaders, German Chancellor Angela Merkel and French President Emmanuel Macron, are understood to be in agreement for the deal to go ahead
- Wall Street and Japan’s largest banks are starting to see eye to eye on the yen’s outlook, saying its advance could break the barrier of 100 per dollar next year. JPMorgan Chase & Co., Goldman Sachs Group Inc and BNP Paribas SA are all forecasting that Japan’s currency will hit the century mark for the first time in four years in 2021. Rarer still, domestic giants Mizuho Bank Ltd. and MUFG Bank Ltd. are joining them, with estimates that the yen could even push to 98, a level unseen since 2013.
- The Bank of Japan is expected to extend on Friday a package of steps aimed at easing corporate funding strains caused by the coronavirus, as a renewed spike in infections cloud prospects of recovery from the health-crisis-induced economic slump. With markets stable and overseas demand showing signs of life, however, the central bank is likely to keep interest rates steady and maintain its view the world’s third-largest economy is gradually emerging from the pandemic’s initial damage.
- In the eurozone, consumer price index (CPI) was negative for a fourth consecutive month in November, matching a four-year low.
- In the UK, the BoE kept its monetary policy stance unchanged, as much of the country enters the festive period under the highest tier of coronavirus restrictions.
In early trade on Friday, the euro slipped against the US dollar to trade at $1.2247, while it has gained against the British pound to trade at GBP0.9050.