U.S.:
Dollar edges down from 14-year high as euro gets data boost
The dollar edged down from a 14-year high against a basket of currencies on Wednesday, with investors cautious about increasing bets on the greenback before getting fresh clues on the U.S. economy and timing of interest rate rises. The greenback surged to its highest levels since late 2002 on Tuesday after U.S. manufacturing data beat expectations, once again threatening to reach parity with the euro, which fell to a 14-year low of $1.0340. The dollar has climbed almost 6 percent since Donald Trump was elected as U.S. president eight weeks ago, on expectations that his new administration will introduce reflationary measures backed by large fiscal spending, prompting the Federal Reserve to follow through with a series of interest rate hikes. But with investors already pricing in between two and three hikes this year, analysts reckon they will want to see more evidence that growth and inflation are on the rise and that the pace of rate hikes will accelerate before putting on more bets on the dollar.
<http://www.reuters.com/article/uk-global-forex-idUSKBN14H01K>
South America:
Argentina treasury minister to propose broad tax reform
Jan 3 Argentina’s new Treasury Minister Nicolas Dujovne said he would propose a broad tax reform focused on slashing taxes on salaries and banking in interviews with La Nacion and other local papers published on Tuesday. Dujovne officially joined the government on Monday, a week after centre-right President Mauricio Macri fired Finance Minister Alfonso Prat-Gay citing differences in management style and split his job into two ministries, treasury and finance. Dujovne said the tax burden on salaries was "ridiculous" at around 40 percent and pushed workers into the informal sector. He estimated that 35 percent of Argentina’s economy was informal. Dujovne’s focus would be reducing costs to make Latin America’s No. 3 economy competitive again, he said, adding he would need "a few months" to prepare a tax reform to propose to the rest of the cabinet.
<http://www.reuters.com/article/argentina-economy-idUSL1N1ET0EB>
Asia:
China Goes on $26 Trillion Commodity Binge as Shortages Seen
Chinese investors traded a record volume of commodity futures last year as speculators poured in and out of the market on bets that shortages are looming. Combined aggregate trading volume on the Shanghai Futures Exchange, Dalian Commodity Exchange and Zhengzhou Commodity Exchange jumped 27 percent from 2015 levels to 4.1 billion contracts, according to data e-mailed by the China Futures Association. Turnover across the bourses rose 30 percent to a record 177.4 trillion yuan ($25.5 trillion), the data show.
<https://www.bloomberg.com/news/articles/2017-01-04/china-goes-on-26-trillion-commodity-binge-as-shortages-foreseen>
Europe:
Euro-Area Economy Ended Year With Fastest Growth Since 2011
The euro-area economy finished 2016 with the strongest momentum in more than 5 1/2 years, bolstering the region as it heads into a year of political uncertainty. A composite Purchasing Managers’ Index climbed to 54.4 in December from 53.9 in November, IHS Markit said on Wednesday. That’s the highest in 67 months and above a Dec. 15 estimate. Strength in both the manufacturing and service sectors was due in part to a weaker euro, London-based Markit said in a statement. Economic expansion was signalled across the “big-four” nations, with Spain leading the way, followed closely by Germany.
<https://www.bloomberg.com/news/articles/2017-01-04/euro-area-economy-ended-year-with-strongest-growth-since-2011>
