By the close of trade on Monday, the South African rand weakened against the US dollar.

  • Chinese President Xi Jinping warned that a “new cold war” could turn hot, and must be avoided, in a speech on Monday at World Economic Forum’s virtual “Davos Agenda” conference. Why it matters: Xi didn’t refer directly to U.S.-China tensions, but the subtext was clear. These were his first remarks to an international audience since the inauguration of President Biden, whose administration has already concurred with Donald Trump’s determination that China is committing “genocide” against Uyghur Muslims, and issued a warning about China’s aggression toward Taiwan.
  • The Federal Reserve this week will likely underscore its commitment to its low-interest rate policies, even as the economy recovers further from the devastation of the viral pandemic. Chair Jerome Powell is sure to strike a dovish tone at a news conference after the Fed’s latest policy meeting ends Wednesday. He may, in particular, aim to puncture any speculation that the Fed might soon curtail its aggressive efforts to support the economy, including its bond purchase program that aims to hold down long-term interest rates.
  • The Senate voted 84-15 to confirm Janet Yellen as Treasury secretary on Monday. Why it matters, Yellen is the first woman to serve as Treasury secretary, a Cabinet position that will be crucial in helping steer the country out of the pandemic-induced economic crisis. Yellen previously served as first female chair of Council of Economic Advisers under President Clinton and first female chair of the Federal Reserve under President Obama.  Her confirmation as Treasury secretary makes her the first person to have held all three economic power positions in the federal government.
  • In SA, President Cyril Ramaphosa stated at an African National Congress national executive meeting that the party had agreed that the government should consider basic income relief for unemployed people, though this would depend on state finances.
  • Moderna said Monday it’s accelerating work on a Covid-19 booster shot to guard against the recently discovered variant in South Africa. Its researchers said its current coronavirus vaccine appears to work against the two highly transmissible strains found in the U.K. and South Africa, although it looks like it may be less effective against the latter. The two-dose vaccine produced an antibody response against multiple variants, including B.1.1.7 and B.1.351, which were first identified in the U.K. and South Africa, respectively.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 6.67%. Further, the yield on 2023 bond advanced to 4.56% while that for the longer-dated 2030 issue rose to 8.78%.

In early trade on Tuesday, the US dollar is trading higher against the South African rand at R15.2633, while the euro is trading higher at R18.5464.  The British pound has gained against the South African rand to trade at R20.8826.

By the close of trade on Monday, the euro declined against most of the major currencies.

  • Wall Street is pinning its bets of an economic rebound this year on mass vaccinations and a virus brought under control, but new coronavirus strains threaten that sunny outlook, a number of firms are warning. Why it matters: None downgraded growth forecasts because of the variants, but they’re acknowledging there’s a new asterisk to the anticipated economic recovery. Driving the news: British Prime Minister Boris Johnson said Friday the country’s more contagious variant is also more deadly.
  • A strong second-half global recovery, revived inflation and resurfacing of concerns over indebtedness in the euro area are in store in 2021, according to an OMFIF review of New Year prospects by German and US experts. The world will find a path back to multilateralism under President Joe Biden, but tensions over China between the US and Europe will continue, complicated by the German leadership change as Chancellor Angela Merkel makes her scheduled departure after the September general election.
  • German business morale slumped to a six-month low in January, as a second wave of COVID-19 infections halted recovery in Europe’s largest economy.
  • German Chancellor Angela Merkel and U.S. President Joe Biden agreed in a phone call on Monday that the COVID-19 pandemic and other global challenges can only be tackled through closer cooperation, a government spokesman in Berlin said on Monday. Transatlantic relations cooled sharply under former President Donald Trump, who attacked Germany repeatedly for its export strength and its relatively low defense spending within the NATO alliance. After bruising meetings of the G7 group of wealthy nations and NATO with Trump in 2017, Merkel said Europe could no longer completely rely on its allies
  • UK businesses have claimed government officials are encouraging them to set up new hubs in the EU to avoid Brexit trade disruption. The firms say they were advised to establish subsidiaries in the bloc by both the Department of International Trade (DIT) and the Department for Environment, Food and Rural Affairs (Defra) after being hit by extra charges, taxes and paperwork.

In early trade on Tuesday, the euro has marginally slipped against the US dollar to trade at $1.2142, while it has gained against the British pound to trade at GBP0.8922.