Macro Roundup (Jan 5)

SHANGHAI, Jan 5 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The US dollar recovered after falling to its lowest level since April 2018 on Monday, as surging coronavirus cases undermined bullish sentiment that had begun the new year across global markets and pushed investors into riskier currencies, such as the Chinese yuan and the euro.

With U.S. interest rates pinned at record lows, massive U.S. deficits and a belief that rebounding world trade will drive non-dollar currencies higher, the dollar initially weakened on the first day of trading in 2021 after falling nearly 7% in 2020.

But the losses for the dollar reversed as risk-appetite soured shortly after the opening of trading for U.S. equity markets, with major indexes down more than 1% on concerns over the rollout of coronavirus vaccines and the outcome over the runoff elections in Georgia that will determine control of the Senate.

The dollar index rose 0.159%, after touching a low of 89.415, a level last seen on April 17, 2018.

On Wall Street, stock futures held steady in overnight trading on Monday after the S&P 500 suffered its first decline to start a year since 2016.

Futures on the Dow Jones Industrial Average rose 20 points. S&P 500 futures gained 0.1% and Nasdaq 100 futures were little changed.

The moves in futures came after a sharp sell-off on Wall Street to kick off 2021. The S&P 500 fell 1.5%, posting its worst daily performance since Oct. 27. Ten out of 11 S&P 500 sectors registered losses, led by real estate.

The blue-chip Dow shed 382 points after tumbling as much as 700 points at its low of the day. The Nasdaq Composite declined 1.4% as the FAANG block all slumped to start the new year.

The broad market sell-off occurred ahead of Tuesday’s Georgia runoff elections, which will determine whether Republicans can hold on to control in the Senate. Meanwhile, rising Covid-19 cases globally and new lockdown restrictions continued to keep investors on edge.

Oil prices slipped from multi-month highs in volatile trade on Monday as U.S. stocks fell near 2% on concerns over the outcome of runoff elections in Georgia.

The oil market pared earlier losses after the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, could not decide on Monday whether or not to increase output in February and will meet again on Tuesday.

Brent futures fell 50 cents, or 1.0%, to $51.30 a barrel, while U.S. West Texas Intermediate (WTI) settled 1.85%, or 90 cents, lower at $47.62 per barrel.

Gold prices rose more than 2% on Monday to their highest level in nearly two months, bolstered by the dollar’s slide ahead of runoff elections for both U.S. Senate seats from Georgia.

Spot gold was up 2.4% at $1,943.13 an ounce. The session high of $1,944.11 was its highest mark since Nov. 9. U.S. gold futures settled up 2.7% at $1,946.60.

“There is the likelihood that we will see significant stimulus, which will lead to further declines in the dollar,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.

Key economic data slated for release today include Germany seasonally-adjusted unemployment in December, Germany seasonally-adjusted unemployment rate in December and PMI US ISM manufacturing PMI in December.