Vaccine rollout day 11          

By the close of trade on Tuesday 09th February 2021, the South African rand strengthened against the US dollar.

  • Optimism about the passing of a stimulus programme in the US boosted investor risk sentiment.
  • Large and respected institutions, including a $1 trillion company run by the richest person on earth are starting to worry about the world’s institutions, most notably the stock market and fiat currencies, and they are taking steps to hedge the risks. Why it matters: Tesla’s announcement that it will invest its reserves in bitcoin and gold as well as dollars makes the company part of a growing movement away from the greenback — which has long been the world’s primary and most trusted store of value — and the largest and most high-profile company to do so. The $1.5 billion bitcoin investment accounts for nearly 8% of Tesla’s cash holdings. Bitcoin consolidated around $46,500 after reaching a new high at $48,216 overnight following Tesla’s disclosure of a $1.5 billion investment in the leading cryptocurrency.
  • China’s producer price index (PPI) rose for the first time in a year as factories passed rising input prices to consumers, data released on Wednesday showed. PPI, reflecting the prices that factories charge wholesalers for their products, rose to 0.3 per cent in January from a year earlier, compared with minus 0.4 per cent in December. This was in-line with the Bloomberg survey which had predicted a rise to 0.3 per cent. PPI was last positive in January 2020, when it stood at 0.1 per cent prior to the full impact of the coronavirus.
  • The Biden administration is cranking up pressure on China via a two carrier military exercise in the South China Sea, a muscular tone-setter of the new US president’s stated plan for “extreme competition” with its rival superpower. On Tuesday, the Theodore Roosevelt and Nimitz carrier strike groups conducted what the US Navy characterized in a statement as a “multitude of exercises aimed at increasing interoperability between assets as well as command and control capabilities.
  • On the data front, in the US, layoffs eased in December and job openings increased modestly, suggesting that the decline in employment during the month was largely due to companies cutting back on hiring amid uncertainty caused by a raging COVID-19 pandemic.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 6.71%. Further, the yield on 2023 bond advanced to 4.65%, while that for the longer-dated 2030 issue rose to 8.58%.

In early trade on Wednesday, the US dollar is trading lower against the South African rand at R14.7122, while the euro is trading marginally lower at R17.8466.  The British pound has declined against the South African rand to trade at R20.3424.

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

  • Mr. Panetta, ECB President Christine Lagarde has announced that within five years at the latest the central bank could introduce the digital euro. What is that? Why is it needed? People are paying less and less with cash and more and more digitally, at supermarket checkouts or online. One in two Europeans would now prefer to pay digitally, and the pandemic has accelerated this development. As a supplement to cash, people want an efficient digital means of payment which protects data and is accepted throughout the euro area.
  • German trade surplus widened in December, as the country’s exports rose during the month, on account of solid trade with China and the US.

In early trade on Wednesday, the euro has advanced against the US dollar to trade at $1.2167, while it has marginally gained against the British pound to trade at GBP0.8822.