US Dollar's dominance to slowly melt away over coming year

Agencies
July 3, 2020

The dollar's dominance will slowly melt away over the coming year on weakening global demand and a sombre U.S. economic outlook, according to a Reuters poll of currency forecasters whose views depend on there being no second coronavirus shock.

Despite fears a surge in new Covid-19 cases would delay economies reopening and stymie a tentative recovery, world stocks have rallied - with the S&P 500 finishing higher in June, marking its biggest quarterly percentage gain since the height of the technology boom in 1998.

Caught between bets in favour of riskier investments, weak U.S. economic prospects as well as an easing in the thirst for dollars after the Federal Reserve flooded markets with liquidity, the greenback fell nearly 1.0 per cent last month. It was its worst monthly performance since December.

While there was a dire prognosis from the top U.S. medical expert on the coronavirus' spread, the June 25-July 1 poll of over 70 analysts showed weak dollar projections as Fed Chair Jerome Powell on Monday reiterated the economic outlook for the world's largest economy was uncertain.

"The dollar rises in two instances: when you see risk off or when there is a situation where the U.S. is leading the global recovery, and we don't think that's going to be the case anytime soon," said Gavin Friend, senior FX strategist at NAB Group in London.

"The U.S. is playing fast and loose with the virus, and chronologically they're behind the rest of the world."

Currency speculators, who had built up trades against the dollar to the highest in two years during May, increased their out-of-favour dollar bets further last week, the latest positioning data showed.

About 80 per cent of analysts, 53 of 66, said the likely path for the dollar over the next six months was to trade around current levels, alternating between slight gains and losses in a range. That suggests the greenback may be at a crucial crossroad as more currency strategists have turned bearish.

But more than 90 per cent, or 63 of 68, said a second shock from the pandemic would push the dollar higher. Five said it would push the U.S. currency lower.

Much will also depend on debt servicing and repayments by Asian, European and other international borrowers in U.S. dollars.

While an early shortage of dollars in March from the pandemic's first shock pushed the Fed to open currency swap lines with major central banks, international funding strains have eased significantly since. In recent weeks, usage of the facility has reduced dramatically.

That trend is expected to continue over the next six months with major central banks' usage of swap lines to "stay around current levels", according to 32 of 46 analysts. While 13 predicted a sharp drop, only one respondent said use of them would "rise sharply".

The dollar index, which measures the greenback's strength against six other major currencies, has slipped over 5 per cent since touching a more than three-year high in March.

When asked which currencies would perform better against the dollar by end-December, a touch over half of 49 respondents said major developed market ones, with the remaining almost split between commodity-linked and emerging market currencies.

"The dollar is so overvalued, and has been overvalued for a long time, it's time now for it to come back down again, as we head towards the (U.S.) election," added NAB's Friend.

Over the last quarter, the euro has staged a 1.8 per cent comeback after falling by a similar margin during the first three months of the year. For the month of June, the euro was up 1.2 per cent against the dollar.

The single currency was now expected to gain about 2.5 per cent to trade at $1.15 in a year from around $1.12 on Wednesday, slightly stronger than $1.14 predicted last month. While those findings are similar to what analysts have been predicting for nearly two years, there was a clear shift in their outlook for the euro, with the range of forecasts showing higher highs and higher lows from last month.

"In comparison to even a month or two ago, the outlook in Europe has improved significantly," said Lee Hardman, currency strategist at MUFG.

"I think that makes the euro look relatively more attractive and cheap against the likes of the dollar. We're not arguing strongly for the euro to surge higher, we're just saying, after the weakness we have seen in recent years, there is the potential for that weakness to start to reverse."

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Agencies
November 21,2020

Washington, Nov 21: Joe Biden on Saturday reached the two-week mark since becoming president-elect, with President Donald Trump stinging from back-to-back setbacks in his desperate, unprecedented bid to undo his election defeat.

Biden, a Democrat, is preparing to take office on January 20, but Trump, a Republican, has refused to concede and is seeking to invalidate or overturn the results through lawsuits and recounts in a number of states, claiming — without proof — widespread voter fraud.

That effort, which critics call an unparalleled push by a sitting president to subvert the will of voters, has met with little success. Trump's campaign has suffered a string of legal defeats and appears to have failed to convince key fellow Republicans in states that he lost, such as Michigan, to buy into his unfounded conspiracy theories.

Trump's bid to cling to power appeared ever more tenuous on Friday after Georgia Secretary of State Brad Raffensperger announced a manual recount and audit of all ballots cast in the southern state had confirmed Biden as the winner there.

A pair of Michigan Republican leaders delivered another blow when they declared on Friday night after a White House meeting with Trump: "We have not yet been made aware of any information that would change the outcome of the election in Michigan."

Trump, in his first public comments in days about the election outcome, again asserted "I won't" during a White House event on lowering drug prices earlier on Friday.

After a series of court defeats, the Trump team is resting its hopes on getting Republican-controlled legislatures in battleground states won by Biden to set aside the results and declare Trump the winner, according to three people familiar with the plan.

It is a long-shot effort focusing on Michigan and Pennsylvania for now, but even if both those states flipped to the president he would need to overturn the vote in another state to vault ahead of Biden in the Electoral College.

Such an event would be unprecedented in modern US history.

Pressure to start formal transition

Biden, who became president-elect on Nov. 7 after his win in Pennsylvania prompted major television networks to call the election, was due to spend Saturday meeting with Vice President-elect Kamala Harris and transition advisers.

Trump will participate virtually this weekend in the last summit of the 20 biggest world economies (G20) of his term.

Trump's nationalistic "America First" approach has often created waves at multilateral summits like the G20, and many US allies have quietly welcomed the coming change of leadership in Washington.

Pressure for Trump to start the formal transition process has mounted, with a few more Republicans voicing doubts over his unsubstantiated claims of fraudulent voting.

There is a "right way and a wrong way" for Trump to contest what he sees as election irregularities, Susan Collins, the Maine Senator, said in a statement. "The right way is to compile the evidence and mount legal challenges in our courts. The wrong way is to attempt to pressure state election officials."

The General Services Administration, run by a Trump appointee, still has not recognized Biden's victory, preventing his team from gaining access to government office space and funding normally provided to an incoming administration.

Critics say Trump's refusal to concede has serious implications for national security and the fight against the coronavirus, which has killed more than 250,000 Americans.

Shut off from government funds, Biden's team on Friday ramped up their fundraising for the transition. Having taken in more than an initial $7 million target largely from wealthy donors, they turned to their campaign's vast mailing list of small donors, asking — according to a fundraising note — for contributions as small as $25.

Even as the Biden team remains unable to access resources and government experts to help assume management of the $4 trillion US government on Inauguration Day, Trump officials have been making unexpected changes to programs, policies and agencies that could affect the incoming administration.

The Treasury Department's surprise demand that the Federal Reserve return hundreds of billions of dollars in credit designed to back loans to businesses drew a sharp response from Biden's team on Friday, who called it "deeply irresponsible," given the country's accelerating Covid cases and new lockdowns.

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News Network
November 24,2020

coronavirus.JPG

Moscow, Nov 24: Russia's Sputnik V coronavirus vaccine is 95 percent effective according to a second interim analysis of clinical trial data, its developers said on Tuesday.

The calculations were based on preliminary data obtained 42 days after the first dose, Russia's health ministry, the state-run Gamaleya research centre and the Russian Direct Investment Fund (RDIF) said in a statement.

They did not note the number of cases used to make the calculation, however.

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News Network
November 30,2020

santosh.jpg

Bengaluru, Nov 30: Chief Minister BS Yediyurappa’s political secretary NR Santhosh got discharged from the hospital Monday, denying that he had attempted suicide. Santhosh, 31, was hospitalized last Friday evening allegedly due to an overdose of sleeping pills.

“Three days ago, there was a personal, family event. It was my cousin brother’s marriage. There, I suffered from food indigestion. I ended up taking a different medicine and due to an overdose, I got drowsy. My wife rushed me to the hospital. This was just a mistake,” Santhosh told reporters.

“I do have the habit of taking sleeping tablets. I usually take 0.2 mg and I should’ve consumed a half tablet. Instead, I took a full one that made me drowsy,” he said.

At one point, Santhosh refuted the police FIR and the hospital’s information that he had consumed 12 sleeping pills.

“I’ve seen the FIR. Where does it say 12 tablets,” he asked. When reporters showed the FIR copy, Santhosh clarified: “FIR means ‘first information received’. Once I gained consciousness, I gave the right answer.”

Santhosh, who is Yediyurappa’s grand-nephew, said there was no political pressure on him. “Let me tell you, there’s always political pressure, but I’m not someone who’d take pills because of it,” he said, adding that there was no pressure on him to resign as the CM’s political secretary.

“I am not depressed. I have strong will power. The wrestling ring in which I grew up will keep me strong for the next fifty years,” he said.

Hitting out at Congress president DK Shivakumar for claiming that a video was behind Santhosh’s suspected suicide, he said: “It’s not the first time Shivakumar has spoken like this. Earlier, he claimed I had some diary. Maybe he has lost his mind after the Rajarajeshwarinagar bypoll defeat. He should get admitted to a hospital or take a break.”

Threatening Shivakumar with protest, Santhosh said that he would mobilize a lakh people in Bengaluru if anything bad was spoken against Yediyurappa.

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