Archives of “December 2020” month

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An ANZ ‘top trade’ for 2021 is for a stronger yuan – 3 key drivers of higher Asian currencies Thu 3 Dec 2020 23:23:25 GMT

  
Analysis, Forex

ANZ look for lower USD/CNH and, more generally, are bullish on Asian currencies for 2021

  • and it is not just because of a weaker dollar, though it helps.
There are three key drivers … a winning trifecta that will see Asian currencies appreciate further next year:
1. the region’s relative success in virus containment. 
  • This means when the global vaccine roll-out eventually begins, eradicating the virus can be achieved more quickly, thus allowing a faster normalisation of activity. 
2. the improved global growth prospects next year bodes well for Asian exports and the broader investor risk sentiment.
3. Asia should benefit from increased foreign investor allocation into the region, given ample global liquidity and a better growth outlook.
More specifically for the Chinese yuan:
  • forecast CNY to strengthen towards 6.30 by the end of 2021, on the back of factors such as strong growth momentum, the PBoC looking to exit unconventional easing, and strong inflows on the back of bond index inclusion. 
ANZ look for lower USD/CNH and, more generally, are bullish on Asian currencies for 2021 

Paul Tudor Jones – there will be an economic “supersonic boom” next year

  
Analysis, US Market

PJT spoke with Yahoo, is looking for a US economic boom in Q2 and Q3 of 2021 on emergence from the coronavirus disaster.

  • an “absolute, supersonic boom” in the economy
  • coronavirus vaccine will release pent-up demand in the US
  • “The vaccine is going to bring us back. We’re going to have an incredible growth rebound”

On the stock market:

  • fiscal & monetary policies are pushing stock valuations
  • “stock market’s on a combination of fiscal monetary pulse that we’ve never seen before in history, nothing like this”
Via an interview at YouTube, link here
PJT spoke with Yahoo, is looking for a US economic boom in Q2 and Q3 of 2021 on emergence from the coronavirus disaster. 

European shares end the day with mixed results

  
Analysis, Global Indices

UK FTSE 100 rises on hopes for a Brexit deal

The European shares are ending the day with mixed results. The UK FTSE 100 closed higher. The France’s CAC was near unchanged and the German DAX fell.

The provisional closes are showing:
  • German DAX, -0.4%
  • France’s CAC -0.1%
  • UK’s FTSE 100 +0.38%
  • Spain’s Ibex, -0.15%
  • Italy’s FTSE MIB, +0.2%
In the European debt market, the benchmark 10 year yields will fell around 3 basis points on the day:
UK FTSE 100 rises on hopes for a Brexit deal_
In other markets:
  • Spot gold is trading unchanged at $1831.44.
  • Spot silver is a down $0.16 -0.66% at $23.94
  • WTI crude oil futures are up $0.20 or 0.44% of $45.48

OPEC+ agrees to raise production by 500K bpd starting in January – report

  
  Analysis

OPEC+ agrees to hike

OPEC+
Reuters report, citing a source.
The baseline has long been a 3 month delay in the taper but that’s not happening. I would have expected a kneejerk lower on this but oil is holding up, at least so far.
I guess if oil can absorb the extra 1mbpd from Libya, it can support this. You know what they say: Something that can’t fall on bearish news probably can’t fall at all. With the US dollar crumbling, that’s a tailwind for oil.
At the same time, it’s early in this oil move.

Deutsche Bank the latest to forecast more misery for the dollar next year

  
Analysis, Forex

This adds to the growing chorus for a weaker dollar in 2021

USD
Deutsche releases its latest forecast for the euro and pound expecting EUR/USD at 1.3000 and GBP/USD at 1.4600 respectively by the end of next year.
There’s not much other details but I reckon it is a fair assumption that they are betting on dollar weakness being a key theme driving the moves. As for the pound, that is likely also contingent on the assumption that there is a Brexit deal in all likelihood.
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