CNN Business/Julia Horowitz
Political instability is another strike against the dollar
There are plenty of reasons to bet against the US dollar right now. Add the riots at the Capitol last week to the list.
What’s happening: Political instability often weighs on currencies around the world, and the violence incited by President Donald Trump is unlikely to bolster confidence in the US dollar at a moment of weakness.
Currency markets largely looked beyond last week’s chaos, according to TD Securities strategist Ned Rumpeltin.
“In some ways that resilience is encouraging,” he told me. “We can’t necessarily take that for granted, however.”
Eurasia Group, the political risk consultancy, called out a divided United States as the top risk for 2021. Domestic political dynamics, along with the country’s mismanagement of the pandemic, will make it difficult for President-elect Joe Biden to reassert America’s global leadership role despite his best efforts, according to Ian Bremmer, the group’s president.
“The US is by far the most politically dysfunctional and divided of all the world’s advanced industrial democracies,” Bremmer tweeted last Thursday.
Investor insight: Since spiking during the period of market turmoil last March, the dollar has dropped more than 12% against a basket of other major currencies. The consensus on Wall Street is it still has room to fall.
“The stars very much seem aligned for dollar weakness,” Rumpeltin said.
China to counter ‘unjustified’ foreign trade and business laws
China’s Ministry of Commerce on Saturday published new rules for countering “unjustified” laws and restrictions imposed by foreign countries on Chinese companies and citizens, as economic relations between Beijing and Washington deteriorate.
The rules on “unjustified extra-territorial application of foreign legislation” were posted on department’s website and established a “working mechanism” to assess the legal implications of such incidents.
According to the notice, a Chinese person or organisation that is restricted by foreign legislation from “engaging in normal economic, trade and related activity with a third State or its citizens,” may report it to the commerce department within 30 days.
The commerce department will then assess a case for its potential violation of international law, impact on China’s sovereignty and national security, and impact on Chinese citizens.
When a citizen or other organisation “suffers significant losses” from non-compliance with foreign legislation, “relevant government departments may provide necessary support”, the notice says.
The Chinese government might also enact “necessary counter-measures” in response.
Covid killing nearly 3,000 in U.S. every day as CDC warns of ‘surge event’ from Capitol riots
Nearly 3,000 people in the U.S. are dying every day, on average, of Covid-19 as top health officials warn that the worst is yet to come.
The U.S. reported more than 3,400 Covid deaths on Friday, which spurred the seven-day average of daily new deaths to a record-high 2,983, up 19% compared with just one week ago, according to a CNBC analysis of data compiled by Johns Hopkins University.
Daily new cases are soaring to fresh highs, as well. Over the past week, the country has reported an average of more than 247,200 new cases every day, up 27% from a week ago, according to Hopkins data. Dr. Robert Redfield, director of the Centers for Disease Control and Prevention, said Friday the outbreak will get worse before it gets better, echoing comments made earlier this week by Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases.
“We’re going to continue to see mortality in the 2,500-5,000 a day range,” Redfield told the McClatchy news agency in an interview. “This is going to continue to get worse through January, and probably parts of February before we really start to turn the corner.”
Cases are already rising substantially almost everywhere, as the country experiences a predicted surge in the virus caused by inter-state travel and family gatherings for holidays last month. Average daily new cases are up by at least 5% in 47 states, according to Hopkins data. Redfield warned Friday that the violent storming of the U.S. Capitol by supporters of President Donald Trump on Wednesday will make the outbreak worse.