MNI EUROPEAN OPEN: Christmas Clampdown

EXECUTIVE SUMMARY

• WORSENING UK COVID OUTLOOK & NO BREXIT DEAL PUSH GBP LOWER, RISK ASSETS STRUGGLE
• U.S. CONGRESS SET TO PASS FISCAL SUPPORT PACKAGE ON MONDAY
• SINO-U.S. TENSIONS CONTINUE TO SIMMER
• FED'S CLARIDA: CURRENT POLICY 'EXACTLY WHERE WE WANT IT'
• SUGA DRAWS LINE IN THE SAND: DEFEND '100 YEN' DOLLAR BARRIER (NIKKEI)

Fig. 1: Spot Gold ($/oz)

Source: MNI - Market News/Bloomberg

UK

BREXIT: There will be no post-Brexit trade deal between the UK and EU unless there's a "substantial shift" from Brussels in the coming days, a UK government source has told the BBC. It is understood there is likely to be a decision before Christmas on whether or not a deal can be reached. But UK sources say it is increasingly likely the UK will leave with no deal. The two sides remain at odds over how many years it will take to phase in new fisheries arrangements. (BBC)

BREXIT: The fate of Britain and the EU's future trading relationship hinged on several hundred million euros of fishing rights on Sunday evening, as both sides continued to seek a breakthrough that would unlock the path to an overall post-Brexit deal. EU chief negotiator Michel Barnier said on Twitter that he and his UK opposite number David Frost were continuing to "work hard" for a deal, with talks at a "crucial moment". "The EU remains committed to a fair, reciprocal and balanced agreement," he said. "We respect the sovereignty of the UK. And we expect the same." Meanwhile, allies of UK prime minister Boris Johnson raised the prospect of talks continuing through next week, pushing any parliamentary vote on a trade deal back into the period between Christmas and January 1, when Britain's Brexit transition period expires. (FT)

BREXIT: Negotiators of a Brexit trade deal inched towards a compromise on fishing rights on Sunday but missed a major deadline, raising the prospect of weeks without arrangements from 1 January even in the event of agreement. The teams led by the chief UK negotiator, David Frost, and his EU counterpart, Michel Barnier, were expected to continue talks on Monday despite the European parliament's notice that it would not vote on a deal if not secured by midnight on Sunday. A UK government source said: "Teams have been negotiating throughout the day and expect to continue tomorrow. Talks remain difficult and significant differences remain. We continue to explore every route to a deal that is in line with the fundamental principles we brought into the negotiations." Frost met Barnier on Sunday afternoon to discuss the latest EU proposals on fisheries, with the UK side posing a series of questions to be answered on Monday, raising some hope of progress. (Guardian)

BREXIT: Brexit trade negotiations could stretch until New Year's Eve, despite the European Parliament setting a deadline of Sunday for the deal to be done, EU sources said on Friday. (Telegraph)

BREXIT: Emmanuel Macron has been accused of risking a no-deal Brexit by making the "massive miscalculation" that Britain will be forced back to the negotiating table in the new year. Downing Street believes Mr Macron is standing in the way of a deal because he is playing to his domestic audience ahead of elections in 18 months' time. (Telegraph)

BREXIT: Britain and the European Union can agree on a series of "mini unilateral" deals to ease any chaos if no trade deal can be agreed by the end of this month, Michael Gove has said. (Telegraph)

BREXIT: The Brexit select committee chair Hilary Benn has said that businesses are finding it hard to prepare as the government has left it "very, very late" for a trade deal with the EU. It comes after his parliamentary group released a report warning ministers about the "overall state of readiness" for the end of the transition period in less than two weeks. (Sky)

BREXIT: Brexit uncertainty on top of the usual volume of Christmas traffic have caused huge queues in Kent, with a line of lorries stretching five miles up the M20 as they head for the Channel tunnel. (Guardian)

BREXIT: France is to deploy customs officers on Eurostar trains from London to Paris as a stop-gap measure to monitor luggage and goods entering the EU when the UK's Brexit transition ends on December 31, even as lengthy traffic jams at Channel ports this week pointed to potential border chaos in the new year. The French have already appointed 600 extra customs officers and 300 more specialist inspectors such as veterinarians at Channel ports and other points of entry to deal with the extra checks and procedures which will come into force post-Brexit. (FT)

CORONAVIRUS: The government has cancelled festive plans for millions of people, bringing in new Tier 4 restrictions in large parts of the country under a two-week coronavirus lockdown from today. Fears over a new, more infectious strain of COVID-19 have prompted the tough measures, affecting those in London, most of the South East, and parts of eastern England. In Tier 4, different households have been banned from mixing over the festive period, causing frustration and disappointment among the many who had been prepared to take advantage of the prime minister's previous promise to allow people from three households to spend up to five days together in 'bubbles'. For the rest of England, up to three households will be allowed to gather for just one day - Christmas Day itself - as opposed to 23-27 December. (Sky)

CORONAVIRUS: A strict travel ban between Scotland and the rest of the UK will be kept in place over Christmas to try to stop a new variant of coronavirus from taking root, Nicola Sturgeon has announced. In addition, for three weeks from Boxing Day, the whole of mainland Scotland is to be placed into the strictest measures - Level 4. In Wales, Level 4 restrictions - in line with Tier 4 rules in England - came into effect from midnight on Sunday, while bubbles will be confined to Christmas Day. (Sky)

CORONAVIRUS: Tier 4 restrictions could be toughened further and remain in place until close to Easter, Government sources have admitted. Ministers believe at least 20 million people will need to have been vaccinated against coronavirus before any significant relaxing of the measures can be considered, it is understood. Matt Hancock said on Sunday that Britain faces a "very difficult" few months, warning that the spread of the virus across swathes of England is now "out of control". He also refused to rule out closing schools for the first time since the original spring lockdown. (Telegraph)

CORONAVIRUS: School closures cannot be ruled out, ministers warned on Sunday, as unions demanded a delay of up to two weeks before they opened in January. (Telegraph)

CORONAVIRUS: Senior Conservative MPs have demanded that Boris Johnson set out a "clear exit strategy" from the "nightmarish cycle" of Covid-19 restrictions as they signalled they could rebel over the latest measures. (Telegraph)

CORONAVIRUS: Scottish First Minister Nicola Sturgeon announced a travel ban with the rest of the U.K., out of concern not to spread the new virus strain that led to a stricter lockdown around London earlier in the day. "That means people from Scotland not visiting other parts of the U.K. and vice versa," she said at a news conference in Edinburgh. (BBG)

CORONAVIRUS: Countries across Europe and beyond raced Sunday to stem a more-infectious strain of Covid-19 by banning travel from the U.K., following a British announcement Saturday that it is imposing fresh lockdowns. (WSJ)

CORONAVIRUS: The British government is making a concerted effort to persuade the Trump administration to lift or soften travel restrictions that bar most people in the United Kingdom from traveling to the United States, sources briefed on the matter said. (RTRS)

CORONAVIRUS: Britain's biggest port stopped all traffic heading to Europe and food supplies into the nation face major disruption after the discovery of a new variant of the Covid-19 virus prompted its nearest neighbors to limit travel links with the U.K. The crisis prompted Prime Minister Boris Johnson to convene a meeting of the government's emergency committee on Monday in a bid to keep goods flowing. Further meetings are happening Sunday evening and Monday morning "to ensure robust plans are in place," the prime minister's office said in a statement. (BBG)

CORONAVIRUS: France's decision to block lorries arriving from the UK for 48 hours in response to the emergence of a new strain of Covid-19 will have a "devastating effect" on the supply of food and other consumer goods to Britain, industry representatives have warned. (Guardian)

FISCAL: The chancellor, Rishi Sunak, is coming under pressure to announce a fresh package of emergency economic support for businesses and workers hit by the last-minute launch of tougher Covid restrictions only days before Christmas. It comes as shop owners warn of a fresh crisis on the UK high street after tier 4 restrictions in London and the south-east of England forced retailers to close during their most crucial trading period of the year. (Guardian)

EUROPE

GERMANY: Germany bought 30 million additional doses of the Covid-19 vaccine developed by BioNTech and Pfizer, Bild am Sonntag reported, citing sources at the German Ministry of Health. That allocation will bolster the 55.8 million doses that it will receive through a European Union plan, with a further 50.5 million doses of the Moderna Inc. due from the EU. Collectively, this will allow Germany will be able to achieve herd immunity in 2021, the Federal Ministry of Health told the paper. (BBG)

FRANCE: France's government can't tell whether sectors of the economy that are shut down such as restaurants will be allowed to reopen in January or whether it will be able to conduct its planned pension reforms next year, Labor Minister Elisabeth Borne said on Sunday. "The priority for now is to overcome the sanitary, social and economic crisis," she said on Europe 1 radio. "I don't know what the economic and social situation will be like in spring so I have to remain cautious about the calendar." (BBG)

ITALY: Italy, one of the countries worst hit by Covid-19, will be placed under new restrictions over the Christmas and New Year periods, Prime Minister Giuseppe Conte announced late Friday. Under the new measures, shops, bars and restaurants will be closed and travel between regions will be banned, and in theory only one daily outside trip per household will be permitted. Religious celebrations will be allowed until 10:00 pm. "Our experts fear that the infection curve will increase during the Christmas period," Conte said. (France 24)

ITALY: Italy's budget commission is expected not to accept a proposal to cap a sweetener for large M&A deals, removing a key hurdle to the sale of struggling lender Monte dei Paschi di Siena SpA to UniCredit SpA, according to people familiar with the plans. Lawmakers within Prime Minister Giuseppe Conte's governing coalition had tried to limit a tax break in the draft budget, which would apply to mergers done next year. Such a cap would make Paschi less attractive to buyers and stall plans by Italy's finance ministry to sell it quickly to Unicredit. (BBG)

ITALY: The European Central Bank has complained to Italian Economy Minister Roberto Gualtieri that measures to spur electronic payments in the country undermined the goal of a neutral approach to means of payment. In a letter dated Dec. 14 published on the European Union legal website, the ECB said the programme of incentives launched by Rome to reduce reliance on cash appeared to be "disproportionate". (RTRS)

ITALY: Gualtieri: Extra deficit needed to support Italy growth plans. (BBG)

GREECE: Greece will receive a first batch of vaccine against Covid-19 on December 26 and plans to start vaccinating healthcare workers from December 27, in line with many other EU member-states, prime minister Kyriakos Mitsotakis said on Friday. (FT)

BELGIUM: Belgium to enforce work from home obligation with inspections. (BBG)

AUSTRIA: Austria's government will impose a third lockdown starting after the Christmas holidays until at least Jan. 17. There will be a second round of rapid antigen mass tests at the end of the lockdown, with restrictions for those who don't participate, Chancellor Sebastian Kurz said in Vienna. Negative test results will be required to visit restaurants or stores from Jan. 18. (BBG)

IRELAND: Ireland "cannot cope" with the growth of coronavirus going into the holiday, the nation's chief medical officer warned, as virus numbers continue to increase. Ireland reported 582 new cases on Friday, the most since November 5, while hospitalizations jumped. "The situation is getting worse more rapidly than we expected," CMO Tony Holohan said. His comments come a day after the government warned it would bring in new virus restrictions before the end of the year. (BBG)

SWITZERLAND: Switzerland has authorized Pfizer Inc.'s and BioNTech SE's Covid-19 vaccine, the first approved for use in the country. (BBG)

SWEDEN: Sweden's Prime Minister Stefan Lofven has promised to fix the societal flaws exposed by the coronavirus once the Nordic nation has emerged from the coronavirus crisis. Addressing the nation in a Christmas speech, Lofven said that the shortcomings of "elderly care, security, health care and education need to be made even more robust" following a pandemic that has so far claimed the lives of almost 8,000 Swedes. (BBG)

RATINGS: Sovereign rating reviews of note from Friday included:

• Fitch affirmed Slovenia at A; Outlook Stable

U.S.

FED: Federal Reserve Vice Chair Richard Clarida on Friday said further fiscal support would help get the economy through what he expects to be a "rough" next couple of months as coronavirus cases surge, but as for the U.S. central bank, policy is just where it should be. "We think we are providing very ample support for the economy with the combination of our guidance and the purchases which are at a very very robust pace," Clarida told CNBC. "We think that the current constellation of policies is exactly where we want it to be." The surge of new coronavirus cases and hospitalizations is "clearly impacting the economy," Clarida said, setting up for a "rough couple of months" ahead. (RTRS)

FED: Reserve Bank of Dallas President Robert Kaplan said Friday that he believes it will be time for the central bank to start pulling back on its bond-buying stimulus efforts when it is clear the economy is recovering strongly. "I'm going to deliberately stay away from a timetable," Mr. Kaplan said in a Wall Street Journal interview. However, Mr. Kaplan said that as 2021 moves forward and vaccines to treat Covid-19 roll out, if the Fed is "making substantial progress on our dual mandate goals, I do think it would be healthy and very appropriate to begin the process of tapering our asset purchases." Tapering means slowing the monthly buying pace on the way toward ending the effort. (WSJ)

FED: Another $900 billion of fiscal support would "absolutely" make a significant difference to the U.S. economy's ability to endure Covid-19, but "challenging months" lie ahead, a top Federal Reserve official said. "This support in unequivocally beneficial," Mary Daly, president of the Federal Reserve Bank of San Francisco, said on CBS's "Face the Nation" on Sunday. (BBG)

FED: MNI BRIEF: Waller Sworn In As Federal Reserve Governor

• The Federal Reserve said late Friday that Christopher J. Waller has been sworn in as a member of its board of governors. It means that Waller, formerly executive vice president and research director at the St. Louis Fed, will vote on monetary policy at the Fed's next meeting on Jan. 26-27 - on MNI Main Wire and email now - for more details please contact sales@marketnews.com.

FED: The six biggest U.S. banks will be able to buy back as much as $11 billion of their own shares in the first quarter of next year after the Federal Reserve gave lenders the green light to resume purchases. The central bank's show of confidence released late Friday followed a second round of 2020 stress tests, which indicated Wall Street navigated the Covid-19 turbulence and has adequate capital to weather an extended economic downturn caused by the virus. In June, the Fed put temporary caps on shareholder payouts by the biggest banks, prohibiting them from buying back their own stocks or increasing dividend payments. JPMorgan Chase & Co. and Morgan Stanley said in statements they plan to resume buybacks starting next quarter. Citigroup Inc. and Goldman Sachs Group Inc. said they also intend to resume purchases next year, while Bank of America Corp. Chief Executive Officer Brian Moynihan has said the firm plans to buy back stock "as soon as we're allowed to." (BBG)

DOLLAR: Janet Yellen once touted the benefits of a weaker greenback for exports, but as the incoming Treasury secretary, she faces pressure to return the U.S. to a "strong-dollar" policy -- and may cause trembles on Wall Street if she doesn't. The greenback's tumble this year -- it's heading for the second-biggest drop in the past decade and a half -- has already stoked foreign policy makers' concerns, thanks to the competitive advantage it gives the U.S. Even a tacit endorsement of a weakening dollar could spur tensions with trading partners. (BBG)

FISCAL: Congress is set to pass one of the largest stimulus packages in the nation's history, which will send much-needed aid to struggling families and small businesses across the country as the nation continues to grapple with the economic fallout of the coronavirus pandemic. The nearly $1 trillion Covid-19 relief bill will include a second stimulus check of up to $600 for many Americans, an extra $300 in enhanced unemployment insurance for 11 weeks, the continuation of key jobless programs and funding for food and rental assistance, among other provisions, lawmakers announced Sunday night. (CNBC)

FISCAL: President Donald Trump signed a one-day spending bill to keep the government funded through Monday, Dec. 21, White House spokesman Judd Deere said in a tweet. (CNBC)

CORONAVIRUS: Covid-19 immunizations with the newly-authorized Moderna Inc. shot are likely to begin Monday morning, said Moncef Slaoui, head of the U.S. government's vaccine drive. Operation Warp Speed plans call for 5.9 million doses of the Moderna vaccine and 2 million doses of the Pfizer Inc./BioNTech SE vaccine to ship on Monday, Slaoui said on CNN's "State of the Union." (BBG)

CORONAVIRUS: A Centers for Disease Control and Prevention panel voted Sunday to put "frontline essential workers" and people 75 years of age and older next in line to be eligible to receive a vaccine against Covid-19. (CNBC)

CORONAVIRUS: The Department of Health and Human Services says U.S. states reporting cutbacks in their Pfizer Covid vaccine allocations have confused initial numbers provided last month with the actual allotments. (CNBC)

CORONAVIRUS: Governor Andrew Cuomo said he worries that the coronavirus mutation in the U.K. may be arriving in New York, saying it is negligent of the federal government not to require testing or to curb travel. Howard Zucker, the state's commissioner of health, said testing hasn't turned up any cases of the variant. But Cuomo compared the situation to the spring, when the virus arrived largely via Europe. He said six flights are arriving each day from the U.K. to New York. (BBG)

CORONAVIRUS: The San Francisco Unified School District will not begin its phased reopening approach on Jan. 25 as planned after labor unions pushed for new Covid-19 precautions that left little time to negotiate, the school district said in a statement. (CNBC)

CORONAVIRUS: Michigan Governor Gretchen Whitmer began relaxing a partial lockdown after the state's outbreak eased. In-person learning for all grades will resume, as will indoor activities like casinos, movies and bowling though at reduced capacity. Indoor dining, nightclubs and indoor and contact sports are still prohibited. (BBG)

POLITICS: President Donald Trump's reelection campaign made a long shot bid at the Supreme Court on Sunday to challenge President-elect Joe Biden's victory in Pennsylvania in a petition that asked the justices to effectively reverse the outcome of the race. (CNBC)

POLITICS: President Trump on Friday discussed making Sidney Powell, who as a lawyer for his campaign team unleashed a series of conspiracy theories about a Venezuelan plot to rig voting machines in the United States, a special counsel investigating voter fraud, according to two people briefed on the discussion. It was unclear if Mr. Trump will move ahead with such a plan. (New York Times)

POLITICS: Senior Trump administration officials are increasingly alarmed that President Trump might unleash — and abuse — the power of government in an effort to overturn the clear result of the election. These officials tell me that Trump is spending too much time with people they consider crackpots or conspiracy theorists and flirting with blatant abuses of power. (Axios)

POLITICS: President Trump's closest confidants no longer expect him to imminently announce he's running in 2024, Jonathan Swan is told by three sources who've recently discussed the matter with the president. (Axios)

EQUITIES: United Airlines to begin flying Boeing 737 Max on Feb. 11. (CNBC)

EQUITIES: Boeing officials "inappropriately coached" test pilots during recertification efforts after two fatal 737 MAX crashes killed 346 people, according to a lengthy congressional report released on Friday. (RTRS)

EQUITIES: Apple Inc. is temporarily closing all of its retail stores in California as the Covid-19 pandemic continues to surge across the state. (BBG)

EQUITIES: Apple's supply chain in Asia has been hit by worker unrest after staff at the iPhone maker's contractors in India and China protested over unpaid wages and bonuses. The US tech group said it would suspend new business with Wistron after discovering that the Taiwanese manufacturer had violated its supplier policies by delaying payments to workers at a factory that makes iPhones near Bangalore in southern India. (FT)

EQUITIES: The Justice Department's antitrust lawsuit against Google likely won't go to trial until late 2023, Judge Amit Mehta said at a status hearing on Friday. Both parties agreed that seemed like a likely timeline and the judge set September 12, 2023, as a tentative date to start the trial. (CNBC)

OTHER

GLOBAL TRADE: Russia plans to introduce export duty on soybean shipments following President Vladimir Putin's call to cool food-price inflation. A sub-commission on custom and tariff regulation approved a soybean export duty of 30%, but not less than 165 euros ($202) per ton, Interfax newswire reported on Saturday, citing a person it didn't name. The tariff will take effect on Feb. 1 and will remain in place through June 30, according to the report. (BBG)

U.S./CHINA: President Donald Trump on Friday signed legislation that would kick Chinese companies off U.S. stock exchanges unless they adhere to American auditing standards, the White House said, giving the Republican one more tool to threaten Beijing with before leaving office next month. "The Holding Foreign Companies Accountable Act" bars securities of foreign companies from being listed on any U.S. exchange if they have failed to comply with the U.S. Public Accounting Oversight Board's audits for three years in a row. (RTRS)

U.S./CHINA: President Donald Trump suggested Saturday that China might have been behind a cyberattack affecting multiple U.S. government agencies and companies, despite Secretary of State Mike Pompeo's allegation hours earlier that Russia was likely behind the attack. The assertion adds confusion to an already complex situation, as cybersecurity workers strive to figure out a hack that came to light less than week ago. At that time Reuters reported, citing people familiar with the matter, that attackers were affiliated with Russia. (CNBC)

U.S./CHINA: China threatened to impose countermeasures after Washington decided to blacklist more than 60 Chinese companies, a sign that tensions between the world's two biggest economies may further escalate during the final days of Donald Trump's Presidency. The U.S. has "abused" export controls to suppress enterprises, institutions and individuals of other countries, China's Ministry of Commerce said in a statement on Saturday. (BBG)

U.S./CHINA: China's top chipmaker Semiconductor Manufacturing International Corp. said Sunday that its addition to a U.S. export control blacklist will likely hamper its development of cutting-edge technologies. (Nikkei)

U.S./CHINA/TAIWAN: China's military has accused the United States of jeopardising peace and stability in the Taiwan Strait by sending a guided missile destroyer through the waterway on Saturday. "Recently, US warships have sailed through the Taiwan Strait from time to time," Zhang Chunhui, a spokesman for the People's Liberation Army's Eastern Theatre Command, said in a statement. "They have deliberately raised the heat of the Taiwan issue … [and] sent flirtatious glances to Taiwan's independence forces, severely jeopardising peace and stability." (SCMP)

U.S./CHINA/TAIWAN: China confirmed that the Shandong aircraft carrier sailed through the Taiwan Strait on Sunday, and said it is heading to the South China Sea for training, Chinese navy says in a statement on WeChat account. This is a "normal" arrangement according to annual plan. The navy will continue to organize such actions in future based on training demands. (BBG)

CORONAVIRUS: The World Health Organization said it would have delivered enough vaccine doses to protect health and social care workers in all participating countries by mid-2021. A fifth of those countries' populations would be vaccinated by the end of 2021, with further doses in the following year. (BBG)

CORONAVIRUS: The Food and Drug Administration has approved Moderna's coronavirus vaccine for emergency use. The vaccine — the second approved for use in the U.S. behind Pfizer and BioNTech's — bolsters the U.S. supply of doses. The potentially lifesaving shots are desperately needed to fend off the pandemic that has taken more than 300,000 American lives and overwhelmed hospitals. (CNBC)

CORONAVIRUS: A panel of experts at the Centers for Disease Control and Prevention has endorsed Moderna's vaccine for people 18 years of age and older in the U.S., clearing another hurdle before shots start on Monday. (CNBC)

CORONAVIRUS: The U.S. Food and Drug Administration is investigating around five allergic reactions that happened after people were administered Pfizer Inc and BioNTech SE's COVID-19 vaccine in the United States this week, a top FDA official said late on Friday. (RTRS)

CORONAVIRUS: The Oxford vaccine is expected to be approved within days of Christmas, kickstarting a massive drive to give jabs to millions of people in January, The Telegraph can reveal. Senior Whitehall sources believe the Medicines and Healthcare Regulatory Agency (MHRA) will authorise the vaccines on December 28 or 29 after final data is provided to the regulator on Monday. (Telegraph)

CORONAVIRUS: China's top respiratory diseases expert Zhong Nanshan said environment-to-human transmission has become a new pattern in the spread of COVID-19, and called on scientists to look for answers to this growing problem. Zhong's comments came amid outbreaks in Chinese cities that were caused by contaminated outer packaging of imported cold-chain foods. Experts said it is a reminder for other countries to curb the virus spread, as contaminated environments could be "amplifiers" for potential outbreaks. "Can humans get infected by the outer packaging of frozen products? How high will the virus concentration get when causing infection? How long can the virus survive? These new problems require us to discover the transmission patterns and come up with preventive measures," Zhong pointed out at an event on Saturday. (Global Times)

HONG KONG: David Hui, a respiratory disease expert at the Chinese University of Hong Kong, said the city may need more stringent measures if it remains unable to rein in infections, Radio Television Hong Kong reported. The steps may include some sort of a partial shutdown, such as requiring people to stay at home for several hours a day and designating one person per household to go out for groceries, he was cited as saying by RTHK. (BBG)

HONG KONG: Hong Kong's Court of Final Appeal rules in favor of the government on the anti-mask law for protests, according to the judgment posted on the judiciary's website. (BBG)

JAPAN: A shock wave ran through Japan's Finance Ministry in early November after news broke of Joe Biden's presumed victory in the U.S. presidential election -- not because of the outcome of the race, but because of an order from the prime minister's office. "Make sure the yen-dollar exchange rate does not cross the 100 yen mark," Prime Minister Yoshihide Suga told Finance Ministry officials. His comment, which was confirmed by multiple sources, came with an unspoken message: Be prepared to sell yen for dollars in case the Japanese currency breaches the key threshold. Suga's willingness to consider an intervention -- an option often seen as a last resort -- took many by surprise. Tokyo-listed exporters need the yen to stay at 100.2 to the dollar or weaker in order to turn a profit, according to a January survey by the Cabinet Office. Any stronger and their earnings would suffer, which in turn would weigh down their stock prices and kick off a negative feedback loop that squeezes the Japanese economy as a whole. (Nikkei)

JAPAN: Japan cabinet approval rating drops 17 ppts to 39%. (Asahi Poll)

JAPAN: Japan's cabinet approved on Monday a record $1.03 trillion budget draft for the next fiscal year starting in April 2021, the Ministry of Finance said, as the coronavirus and stimulus spending puts pressure on already dire public finances. (RTRS)

AUSTRALIA: Around a quarter of a million people in Sydney's northern beach suburbs were ordered on Saturday into a strict lockdown until midnight on Wednesday in an effort to contain a coronavirus cluster which authorities fear may spread across the city. (RTRS)

AUSTRALIA: Authorities in New South Wales, the nation's most populous state whose capital is Sydney, will limit gatherings in homes and entertainment venues from midnight Sunday, and the curbs will be in force at least until Dec. 23. At least 28 of the 30 new Covid-19 cases in the past 24 hours were linked to a growing cluster of infections in the city's Northern Beaches area, where the tally stands at 66. Household gatherings in metropolitan Sydney will be limited to 10 visitors. At least three states have imposed restrictions or border measures on travelers from Sydney ahead of Australians gathering to celebrate the Christmas holiday season. (BBG)

AUSTRALIA: Health officials in Australia will tighten restrictions next week on foreign international flight crew amid concern that infected airline workers may spread the virus. The changes include weekly Covid testing and accommodating crew in dedicated quarantine hotels with government oversight, Queensland's Chief Health Officer Jeannette Young said. (BBG)

AUSTRALIA: Australia upgraded its forecast for earnings from mining and energy exports in the 2021 financial year as booming iron ore prices boost the coffers of the world's top producer. Export sales are seen at A$279 billion ($212 billion) in the year to June 30, 2021, up about 9% on the previous forecast in September, the government's Department of Industry, Science, Energy and Resources said in a quarterly update. That's still down from a record A$291 billion in fiscal 2020 (BBG)

AUSTRALIA: In its annual information paper on the CCyB, APRA today confirmed it considers that a zero per cent CCyB remains appropriate at this point in time based on an assessment of the systemic risk environment for ADIs. (APRA)

SOUTH KOREA: The Seoul city government is pushing to implement an extreme assembly restriction measure that would ban gatherings of five or more people in the capital to slow the spread of the coronavirus, officials said Monday. Its new administrative order for the restrictions on freedom of assembly may take effect on Christmas Eve in time for the peak season for year-end gatherings and events, the officials said. (Yonhap)

SOUTH KOREA: South Korean government and ruling party are considering including rental subsidies to small businesses hit by social distancing rules in another round of emergency handouts next month, Korea Economic Daily reports, citing an unidentified official at ruling Democratic Party. The third cash handout would be more than 4t won if direct rental assistance is included. Govt allocated ~3t won for 3rd cash handout in 2021 Budget. (BBG)

SOUTH KOREA: Financial Supervisory Service prepared plan to recommend banks to cut dividend payout ratio by 5-7ppts to ~20% for 2020 from last year, Korea Economic Daily reports, without citing anyone. The South Korean financial watchdog has position that banks should reduce dividends and secure buffer under pandemic. (BBG)

ASIA: MNI POLICY: China Shifts To Regional Pacts Amid Trade Tension

• China is likely to forge more regional partnerships to counter growing challenges to its export-oriented growth, according to policy advisors speaking during the 5th National Development Forum held by National School of Development at Peking University Sunday. China must also exploit the enormous domestic investment and consumption opportunities not only in response to trade tensions with the U.S., but also to fortify its own economy, said Zhang Junkuo, deputy head of the State Council's Development Research Center - on MNI Main Wire and email now - for more details please contact sales@marketnews.com.

CANADA: The Ontario government is poised to impose a provincewide lockdown starting Christmas Eve, sources confirmed Sunday. (CBC)

MEXICO: Mexico City will shut down all non-essential activity starting on Saturday and until January 10 as Covid-19 cases soar in the nation's capital. The shutdown extends to the State of Mexico, the nation's most populous state. The decision comes after the number of people with the virus occupying hospital beds reached a record this month in Mexico City. (BBG)

MEXICO: President-elect Joe Biden and Mexican President Andrés Manuel López Obrador discussed in a phone call Saturday working together on a "new approach" to migration that "offers alternatives to undertaking the dangerous journey" to the U.S. (Axios)

RUSSIA: At least 200 organizations, including government agencies and companies around the world, have been hacked as part of a suspected Russian cyber-attack that implanted malicious code in a widely used software program, said a cybersecurity firm and three people familiar with ongoing investigations. (BBG)

RUSSIA: Secretary of State Mike Pompeo said in a Friday evening interview that "we can say pretty clearly that it was the Russians" behind a massive cyber attack that breached dozens of government agencies, think tanks and companies. (Axios)

RUSSIA: There is no question that Russia is behind the recent hacking campaign against the United States, the head of the U.S. House of Representatives intelligence panel said on Sunday, warning that President Donald Trump's effort to play down Moscow's role and point to China was a threat to U.S. national security. "Based on what I've seen, I don't think there's any question that it was Russia," House intelligence committee Chairman Adam Schiff told MSNBC in an interview. "It just uniformly destructive and deceitful, and injurious ... to our national security," he said of Trump's Saturday comments. (RTRS)

RUSSIA: The Trump administration has informed lawmakers of its plan to shutter its two remaining consulates in Russia. In a notification dated December 10, the US State Department told Congress it intends to close the consulate in Vladivostok and suspend operations at the consulate in Yekaterinburg. Their closures would leave the US with only one diplomatic outpost in Russia -- the US Embassy in Moscow -- at a time of heightened tensions between the two nations and the notice comes as President-elect Joe Biden prepares to take the helm of the US government. (CNN)

RUSSIA: A small number of UK organisations are known to have been affected by a suspected Russian hacking campaign that has also penetrated top secret US government agencies. No public sector bodies are yet known to be among the UK-based victims, according to a security source. (Sky)

SOUTH AFRICA: As the country experiences another wave of coronavirus infections, patients seeking care within Mediclinic hospitals are exceeding previous numbers during the first peak, Gerrit de Villiers, a group general manager said in a statement. Demand in many intensive care and high care units have reached capacity, the company said. (BBG)

TURKEY: Those who threaten Turkey with sanctions will end up disappointed, the nation's president said on Dec. 19. "We are determined to put across that Turkey will never hesitate to use its sovereign rights," President Recep Tayyip Erdoğan said at a highway opening. "They tried to confront Turkey using every method, such as using terrorist group, coup attempts, political and economic traps, sanctions," he added, speaking via video link. "Thank God they have not been successful so far." (Hurriyet)

SAUDI ARABIA: Saudi Arabia has temporarily suspended all international passenger flights for citizens and residents over fears about the fast-spreading new variant of the coronavirus. The kingdom's interior ministry says the one-week flight ban may be extended "until medical information about the nature of this virus becomes clear." (MarketWatch)

IRAQ: At least three Katyusha rockets landed in Baghdad's heavily fortified Green Zone in an attack targeting the U.S. Embassy, two Iraqi security sources said on Sunday. The Iraqi military said that an "outlaw group" fired rockets at Baghdad's heavily fortified Green Zone on Sunday. The rockets hit a residential complex inside the Green Zone, damaging buildings and cars but causing no casualties, a military statement said. (RTRS)

OIL: OPEC+ will react faster to changes and take a more hands-on approach with the oil market, thanks to its accelerated schedule of monthly meetings, said the group's leaders Russia and Saudi Arabia. More frequent OPEC+ conferences mean policy makers in oil-producing countries will drive the market in the coming months, not speculators, said Saudi Energy Minister Prince Abdulaziz bin Salman. He spoke to reporters after talks in Riyadh on Saturday with Russian Deputy Prime Minister Alexander Novak. "We are meeting monthly because we believe that the market is still not recovered and is still extremely volatile," Novak said. "We need to adopt a hands-on approach and be able to react faster." (BBG)

OIL: Exports and transit of Russian oil in the first quarter of 2021 were planned at 62.1 million tonnes vs 62.4 million tonnes in the fourth quarter of 2020, a quarterly export schedule seen by Reuters showed on Friday. On a daily basis oil exports and transit from Russia will rise by 1.7% in the first quarter of 2021 compared to the fourth quarter of 2020, Reuters calculations showed. (RTRS)

CHINA

POLICY: China is likely to keep its monetary and fiscal policies moderate next year with targeted measures, the China Securities Journal said in a commentary following the Central Economic Work Conference last week. There will be no excess liquidity injection and the macro-leverage ratio will be maintained, the commentary said. Fiscal policy will largely maintain its strength and the preference for key areas, Support for private and small companies may be retained while tax and fee reductions are likely to be more precise, the Journal said. (MNI)

ECONOMY: MNI POLICY: China 2020, 2021 GDP May Average About 5%

• China will focus on structural reform and boost domestic demand next year while growth will be easier to achieve given a low base of about 2% in 2020, senior officials said in an annual conference held by China Center for International Economic Exchanges on Saturday - on MNI Main Wire and email now - for more details please contact sales@marketnews.com.

ECONOMY: China's leadership plans to set its real economic growth target at about 8% for 2021, several government sources say, as the country nears a full recovery from the coronavirus-induced lull it suffered this year. (Nikkei)

PBOC: MNI POLICY: PBOC Keeps Dec Loan Prime Rate Unchanged

• China's central bank maintained its key loan rate unchanged Monday for the eighth month in a row as it aims to normalize monetary policy with the economy on track and debt pressures increasing. The December Loan Prime Rate, the benchmark to set companies' cost of borrowing, remains at 3.85% for the one-year maturity and at 4.65% for the five-year maturity. The move was expected by policy advisors and market analysts as the People's Bank of China held its Medium-Term Lending Facility rate at 2.95% on Dec. 15. The LPR is linked to the one-year MLF, which is viewed as being closer to market rates - on MNI Main Wire and email now - for more details please contact sales@marketnews.com.

YUAN: China may increase the flexibility of the yuan and allow more capital outflow and controlled inflow in a combined approach to stabilizing the yuan next year, Guan Tao, the chief economist of BOC International wrote in an article published by Yicai.com. Guan, a former director of the international payments department at the State Administration of Foreign Exchange, emphasized one policy tool cannot be expected to solve all problems. The Central Economic Work Conference last week talked of "maintaining the stability of the yuan at a reasonable and equilibrium level" for the first time in two years, Guan said. (MNI)

BONDS: The interbank bond market is essential to China's bond market, the Financial News reported on Sunday citing industry experts from the PBOC. In what appeared to be a response to critics blaming the central bank for the recent string of SOE bond defaults, the report cited PBOC sources who said the main trading subject of credit bonds should be institutional investors rather than individual investors. Recent cases of credit bond default were due to inadequate corporate management unrelated to the credit bond market, and the authorities should focus on improving regulation mechanisms and credit ratings, the report said. (MNI)

CORONAVIRUS: The port city of Dalian, Northeast China's Liaoning Province, ordered all of its local medical institutions to enter wartime mode on Sunday, after the city reported a new confirmed COVID-19 case on Saturday, bringing the total to two confirmed cases and six silent carriers. (Global Times)

CORONAVIRUS: China said it has already administered more than 1 million coronavirus vaccines since July and plans a phased rollout that will initially target workers at higher risk of infection, as the country seeks to be at the vanguard of the global immunization effort. Vaccines developed by Sinovac Biotech and state-owned China National Biotec Group have been dispensed in the country since they were granted emergency-use authorization in July. (BBG)

FDI: China published rules on Saturday for reviewing foreign investment on national security grounds, potentially broad measures that it insisted did not amount to protectionism. The review system announced by the National Development and Reform Commission (NDRC) covers foreign investments in military sectors and the acquisition of controlling stakes in such sectors as energy, natural resources, agriculture, internet technology and financial services. (RTRS)

MARKETS: China will accelerate the rollout of futures and options for natural gas, refined oil and peanuts to help price discovery, a senior securities regulator said on Saturday. Fang Xinghai, vice chairman of the China Securities Regulatory Commission, also told a forum in Shenzhen that the country's planned expansion of its capital markets would require a more sophisticated financial derivative market. "Currently, China's financial futures and options market is at an early stage of development," Fang said in a speech that was published by the China Futures Association. (RTRS)

FINTECH: China should be aware of systemic risks from the rapid development of fintech firms, Beijing Business Daily reported citing former Minister of Finance Lou Jiwei. Some fintech companies have insufficient risk retention and unclear data ownership and their data collection and risk assessment process may be skewed, Lou said. He said that China should avoid a "too big to fail" approach and encourage competition by limiting the number of banks a single platform can work with at the same time. (MNI)

OVERNIGHT DATA

JAPAN NOV CONVENIENCE STORE SALES -2.2% Y/Y; OCT -4.3%

NEW ZEALAND NOV CREDIT CARD SPENDING -5.6% Y/Y; OCT -6.0%
NEW ZEALAND NOV CREDIT CARD SPENDING +0.1% M/M; OCT +1.5%

SOUTH KOREA DEC 1-20 EXPORTS +1.2% Y/Y; NOV +11.1%
SOUTH KOREA DEC 1-20 IMPORTS -8.0% Y/Y; NOV +1.3%

UK DEC LLOYDS BUSINESS BAROMETER -4; NOV -21

CHINA MARKETS

PBOC NET INJECTS CNY90BN VIA OMOS MON

The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos and CNY100 billion via 14-day reverse repos with rates unchanged on Monday. This resulted in a net injection of CNY90 billion given the maturity of CNY20 billion of reverse repos today, according to Wind Information.

• The operations aim to to maintain stable liquidity at the end of the year, the PBOC said on its website.
• The 7-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1114% at 09:25 am local time from the close of 2.1137% on Friday.
• The CFETS-NEX money-market sentiment index closed at 33 on Friday vs 53 on Thursday. A lower index indicates decreased market expectations for tighter liquidity.

PBOC SETS YUAN CENTRAL PARITY AT 6.5507 MON VS 6.5315

The People's Bank of China (PBOC) set the dollar-yuan central parity rateslightly lower at 6.5507 on Monday, compared with the 6.5315 set on Friday.

MARKETS