Sluggish Start To 2021

A fairly sluggish start to 2021 trade. GBP/USD is flat at 1.3674, sterling could face some headwinds after the UK recorded another daily high in new Covid-19 cases, while PM Johnson warned that tougher restrictions might be imminent. Johnson told the BBC on Sunday that the gov't may have to keep schools shut. Opposition leader Starmer urged the PM to declare a nation-wide lockdown within 24h, while Scottish First Min Sturgeon said that the Scottish gov't will consider "further action" to contain the spread of the virus when it meets on Monday. GBP/USD last

• JPY has weakened against most crosses. The weekend saw Tokyo Gov Koike & govs of three neighbouring prefectures urge central authorities to declare a state of emergency in the area to stop the spread of new Covid-19 infections, but the central gov't said it will consult experts before making a decision. The Nikkei reported, without attribution, that PM Suga will hold a presser today to explain measures taken by his gov't to contain the spread of the virus. USD/JPY last 103.20.
• AUD/USD last up 3 pips, getting a bit of a boost after reports that New South Wales found no new cases of Covid-19 yesterday, indicating stricter containment measures over the festive period could be having the desired effect.
• NZD/USD has wavered around neutral levels, with liquidity sapped by a public holiday in New Zealand. The rate last changes hands at 0.7188, virtually unchanged on the day.
• The U.S. Congress is set to confirm the election of Joe Biden for the next U.S. President this week. Outgoing Pres Trump reiterated his calls for a vote recount in Georgia, while a group of GOP Senators led by Ted Cruz signalled that they will object to the certification of Trump's election defeat. Most expect their initiative to fall flat. The political outlook in the U.S. will remain cloudy at least until after Tuesday's Georgia Senate runoff.
• The PBOC fixed USD/CNY at 6.5408, around 159 pips weaker for the yuan than the previous fix. Despite this, USD/CNH opened below the 6.50 handle and has proceeded to decline further, last at 6.4875. The PBOC drained a net CNY 140bn from the system today.