By the close of trade on Friday, the South African rand weakened against the US dollar. Time zones mean that most mornings Asia looks West to see which direction markets should initially travel, and on Mondays, that means looking to Friday’s US and European closing prices. Today, they don’t paint a happy picture, with headline stock indices such as the S&P500 finishing lower, and the NASDAQ essentially flat.

  • New coronavirus restrictions dented investor optimism about US President, Joe Biden’s plans to increase fiscal stimulus measures in the world’s biggest economy.   One of President Joe Biden’s top economic aides on Sunday will press Democratic and Republican senators for a fresh $1.9 trillion in coronavirus relief to help struggling Americans and avert a larger economic crisis. Brian Deese, Director of the National Economic Council, said he would speak to the senators to make the case for a large rescue plan. “We can’t wait,” White House spokesperson Karine Jean-Pierre told reporters. “Just because Washington has been gridlocked before doesn’t mean it needs to continue to be gridlocked.”
  • In the US, on the data front, manufacturing activity surged to its highest level in nearly 14 years in early January.
  • Existing home sales unexpectedly rose on a monthly basis in December, but surging house prices amid record-low inventory could slow the housing market momentum in the coming months.
  • The Chinese economy brought in more foreign direct investment than any other country last year, knocking the United States from its perch atop the list. China brought in $163 billion in inflows last year, compared to $134 billion attracted by the U.S., the United Nations Conference on Trade and Development wrote in a report released on Sunday. In 2019, the U.S. received $251 billion in inflows and China received $140 billion. Overall, the report found that foreign direct investment tanked globally, as the Covid-19 pandemic brought countries large and small to virtual stand-stills.
  • The yield on benchmark government bonds rose on Friday. The yield on 2026 bond rose to 6.66%. Further, the yield on 2023 bond advanced to 4.54%, while that for the longer-dated 2030 issue rose to 8.75%.

In early trade on Monday, the US dollar is trading lower against the South African rand at R15.1242, while the euro is trading lower at R18.4222.   The British pound has marginally declined against the South African rand to trade at R20.7221.

By the close of trade on Friday, the euro advanced against most of the major currencies.

  • Germany’s services sector shrank for the fourth month in a row in January, as a hard lockdown shuttered most non-essential businesses as well as schools in Europe’s biggest economy.
  • Manufacturing remained in expansion territory as exports kept German factories bustling.
  • Economic activity in the eurozone shrank significantly in January, as stringent lockdowns to contain the coronavirus pandemic hit the bloc’s dominant service industry hard.
  • Saudi Arabia’s king appointed Fahad al-Mubarak as central bank governor, his second stint in one of the most sensitive positions in the kingdom replacing Ahmed al-Kholifey, a decree carried on state media on Sunday said. Mubarak, who had helmed the Saudi Central Bank (SAMA) from 2011-2016, was previously chairman and managing director of Morgan Stanley, Saudi Arabia, and has also served as chairman of the Saudi stock exchange. He was succeeded as governor in 2016 by Kholifey, who guided SAMA during a sharp economic contraction last year caused by lower crude prices and COVID-19.
  • Mexican President Andrés Manuel López Obrador said Sunday he has tested positive for COVID-19 and that the symptoms are mild. Mexico’s president, who has been criticized for his handling of his country’s pandemic and for not setting an example of prevention in public, said on his official Twitter account that he is under medical treatment. “I regret to inform you that I am infected with COVID-19,” he tweeted.
  • Japanese Prime Minister Yoshihide Suga faced renewed pressure on Monday over his handling of the coronavirus pandemic, with a new opinion poll showing many believed the government was too slow to respond to the latest wave of infections. Opposition lawmakers were also increasingly frustrated with Suga’s taciturn leadership style, demanding he provide detailed answers to questions about the COVID-19 crisis and the Tokyo Olympics set to start in less than six months. Suga is struggling to halt a steady decline in support for his four-month-old government even after launching a raft of measures to contain a third wave.

In early trade on Monday, the euro has marginally advanced against the US dollar to trade at $1.2166, while it has weakened against the British pound to trade at GBP0.8892.


Vaccine Update: As of Sunday, Bloomberg estimates that the U.S. has given 21.1 million doses of vaccine have been delivered while the rate of vaccination now exceeds 1 million per day.