Here is what you need to know on Monday, January 4, 2021:
The new year has begun with the dollar on the back foot and a cautious market mood. Investors are concerned about the fast spread of coronavirus and watching the slow deployment of vaccines. Purchasing Managers' Indexes and the special Georgia runoffs in the US are closely watched.
Coronavirus: The disease that dominated 2020 continues spreading quickly in 2021. Contagious variants found in the UK and in South Africa and family gatherings around the holidays may have contributed to rising cases and pressure on hospitals – even in Australia and Japan, which consider tightening the screws. The US passed the 350,000 COVID-19 deaths and UK infections are above 50,000 per day.
Vaccines: Frustration is growing in Germany and other places over the slow distribution of the Pfizer/BioNTech jab. Pharmaceuticals are set to ramp up production in the coming weeks. US top epidemiologist Anthony Fauci said inoculations should pick up. The UK begins administering the University of Oxford/AstraZeneca vaccine on Monday after approving it in the dying days of 2020.
US politics: The southern state of Georgia holds two runoff races for the Senate, which will determine control of the upper chamber. Democrats need to win both contests to obtain effective control of the upper chamber and enact their stimulus policies that markets want. Opinion polls show neck-to-neck races and counting may take several days.
President Donald Trump signed off on a $900 billion relief package around the holidays after a delay. He is still trying to overturn the election results, eyeing Congress' ratification scheduled for Wednesday. Gold – which heavily depends on additional stimulus – has been rising and trading above $1,920.
Markit's final Purchasing Managers' Indexes for December are set to confirm modest growth in France, robust expansion in Germany and the UK, and moderate one in the US. Markets eye Tuesday's ISM Manufacturing PMI, the first hint toward the Nonfarm Payrolls.
US Manufacturing PMI December Preview: COVID is the present but recovery is the future
While stocks are only marginally higher, the safe-haven dollar extends its decline, with EUR/USD rising toward 1.23 and GBP/USD nearing 1.37 – extending its gains after the UK is fully out of the EU. London and Brussels signed a post-Brexit trade deal on Christmas Eve.
USD/JPY is dipping under 103 while commodity currencies are edging higher against the dollar.
Cryptocurrencies continue their uptrend, with Bitcoin trading around $32,000 after surging above $34,000 over the holidays. Ethereum is also soaring, changing hands above $1,000. XRP is attempting recovery above $0.20 after a legal issue sent Ripple's token to a free-fall.
More Week Ahead – Georgia election and US jobs report kick off new year
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