Meanwhile, as the count in Georgia comes to a close, yields on longer term notes begin to increase as the Senate gets closer to a 50-50 split and the likelihood of more spending under a Biden administration ….
Rates
Federal Reserve as of 4 January 2021
Bloomberg as of 6 January 2021 10:30 am AST
Federal Funds Rate
0.09
0.08
Prime Rate
3.25
3.25
3-month Treasury
0.09
0.08
2-year Treasury
0.11
0.13
10-year Treasury
0.93
1.02
30-year Treasury
1.66
1.78
Source: Federal Reserve, OANDA
And the buzz phrase again mid-week is dollar weakening as exchange rates for a number of foreign exchange pairs continues to fall. This in light of disappointing jobs numbers from ADP where the payroll company determined that 123,000 jobs were lost in December 2020.
The Board of Governors of the Federal Reserve System today released the foreign exchange rates for the following foreign exchange pairs. Compare with exchange rates quoted by foreign exchange broker OANDA as of 9:59 PM EST:
CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76819 USD.
USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.30157 CAD
CAD/USD=0.76819 USD/CAD=1.30157
CNH/USD= 0.15142 USD/CNH=6.60316
EUR/USD= 1.18174 USD/EUR=0.84611
DKK/USD =0.15870 USD/DKK=6.29960
NGN/USD= 0.00262 USD/NGN=379.530
JPY/USD=0.00951 USD/JPY=105.18
INR/USD=0.01347 USD/INR=74.0906
JMD/USD=0.00674 USD/JMD=145.426
GYD/USD=0.00478 USD/GYD= 209.215
GHS/USD=0.17136 USD/GHS= 5.82457
XCD/USD=0.37037 USD/XCD= 2.70
KES/USD = 0.00911 USD/KES= 108.146
Source: OANDA
Major political/legal event in the United States:
Last Monday, the Federal Reserve Bank of New York’s Center for Microeconomic Data released the October 2020 Survey of Consumer Expectations, which shows a decline in income and spending growth expectations. Changes in labor market expectations were mixed showing declines in both average job loss and job finding expectations. Median inflation expectations declined at the short-term horizon, while remaining unchanged at the medium-term horizon. Uncertainty and disagreement about future inflation decreased slightly but remained at an elevated level.
CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76351 USD.
USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.30955 CAD
CAD/USD=0.76351 USD/CAD=1.30955
CNH/USD= 0.15097 USD/CNH=6.62248
EUR/USD= 1.17863 USD/EUR=0.84834
DKK/USD =0.15827 USD/DKK=6.31674
NGN/USD= 0.00260 USD/NGN=382.756
JPY/USD=0.00962 USD/JPY=103.98
INR/USD=0.01349 USD/INR=73.9934
JMD/USD=0.00678 USD/JMD=144.450
GYD/USD=0.00478 USD/GYD= 209.187
GHC/USD=0.00002 USD/GHC= 58,277.2
XCD/USD=0.37037 USD/XCD= 2.70
KES/USD = 0.00909 USD/KES= 107.789
Source: Bankrate
Major political/legal event in the United States: Ballot counting is continuing in the U.S. presidential elections. Democratic presidential candidate Joseph R. Biden reportedly has 264 unofficial Electoral College votes while Republican candidate Donald J. Trump has 214 unofficial Electoral College votes.
The official declaration of President-Elect is scheduled for 14 December 2020.
Today, the House Republican caucus plans to meet to discuss the feasibility of President Trump’s legal strategy for turning the ballot counting tide toward him and away from Joe Biden. A number of prominent Republicans have questioned the President’s post election tone. For example, retiring US Senator Pat Toomey, Republican of Pennsylvania, found Trump allegations of election fraud to be without evidence and Mr Trump‘s words, “disturbing.”
CAD/USD: If you come to the United States with one Canadian dollar (CAD)and wish to sell it for a US dollar (USD), the market price is .76351 USD.
USD/CAD: If you take a US dollar (USD) to Canada and wish to sell it for a Canadian dollar (CAD), the market price is 1.30955 CAD
CAD/USD=0.76351 USD/CAD=1.30955
CNH/USD= 0.15097 USD/CNH=6.62248
EUR/USD= 1.17863 USD/EUR=0.84834
DKK/USD =0.15827 USD/DKK=6.31674
NGN/USD= 0.00260 USD/NGN=382.756
JPY/USD=0.00962 USD/JPY=103.98
INR/USD=0.01349 USD/INR=73.9934
JMD/USD=0.00678 USD/JMD=144.450
GYD/USD=0.00478 USD/GYD= 209.187
GHC/USD=0.00002 USD/GHC= 58,277.2
XCD/USD=0.37037 USD/XCD= 2.70
Source: Bankrate
Major political/legal event in the United States: Ballot counting is continuing in the U.S. presidential elections. Democratic presidential candidate Joseph R. Biden reportedly has 264 unofficial Electoral College votes while Republican candidate Donald J. Trump has 214 unofficial Electoral College votes.
The official declaration of President-Elect is scheduled for 14 December 2020.
Today, the Board of Governors of the Federal Reserve System decided to maintain its target range for its inter-bank rate between 0 and .25%.
Also, today, President Donald J. Trump held a press conference expressing concern about how ballots were being counted in a number of states. He indicated that he was prepared to pursue legal action to ensure that ballot counts were conducted in a fair and transparent manner.
Capital abhors a vacuum and even with the U.S. general election three days away, capital will try to cut through the campaign noise and seek out a return. From a political and legal event perspective, traders should assess the strength of legal challenges to voting, especially challenges raised by the Republican Party.
Republicans and Democrats have been building their legal teams for over a year and both will be on the lookout for voting irregularities including evidence of voter suppression or voter fraud. Republicans are expected to challenge authenticity of mail-in ballots and the deadlines for when these ballots are expected to be received. Traders should be particularly mindful of the intensity of Republican challenges given that incumbent president Donald J. Trump is running behind Democratic nominee Joseph R. Biden in national polls.
Real Clear Politics has Mr Biden polling at 51.3% versus Mr Trumps 43.5% during the period 21 October to 30 October 2020. PredictIt is pricing a .65 probability of a Democratic takeover of the White House versus a probability of .40 that the Republican Party maintains control of the Oval Office.
But the foreign exchange markets appear to see the value of the US dollar priced in various currencies increasing as we get closer to the election.
Country/Currency
24 October
25 October
26 October
27 October
28 October
29 October
30 October
31 October
Mexico (MXN)
20.9210
20.8408
20.8476
20.9667
20.9271
21.1694
21.3101
21.2962
Canada (CAD)
1.31361
1.31191
1.31220
1.31829
1.31776
1.32555
1.33221
1.33172
Japan (Yen)
104.72
104.66
104.67
104.87
104.61
104.30
104.44
104.49
China (Yuan)
6.67733
6.67680
6.67680
6.69916
6.70515
6.71672
6.71157
6.68746
Euro
.84496
.84274
.84288
.84578
.84622
.85056
.85398
.85694
Eastern Caribbean Dollar
2.70
2.70
2.70
2.70
2.70
2.70
2.70
2.70
Brazil (BRL)
5.60180
5.61840
5.61818
5.62115
5.64474
5.72242
5.75821
5.76506
Price of US Dollar in selected exchange rates 24 October to 31 October 2020
With the exception of Japan and the Eastern Caribbean, the prices in foreign currency offered for a US Dollar have been inching up over the last week. Traders in the above nations reflect a number of major US trading partners and the increase in the amount traders in these countries are willing to offer a seller of the US dollar tells me that at a minimum, they have positive expectation in the potential for growth in the US and that public policies offered by Mr Biden might not deter expected growth or value of the dollar.
Again, traders should be on the lookout for any legal, legislative, or regulatory actions that thwart the ability of Mr Biden to garner enough votes to win the Electoral College.
The survey was undertaken jointly by the U.S. Department of the Treasury, the Federal Reserve Bank of New York, and the Board of Governors of the Federal Reserve System.
A complementary survey measuring foreign holdings of U.S. securities is also conducted annually. Data from the most recent such survey, which reports on securities held at end-June 2020, are currently being processed. Preliminary results are expected to be reported on February 26, 2021.
OVERALL RESULTS
This survey measured the value of U.S. portfolio holdings of foreign securities at year-end 2019 as approximately $13.1 trillion, with $9.5 trillion held in foreign equity, $3.1 trillion held in foreign long-term debt securities (original term-to-maturity in excess of one year), and $0.5 trillion held in foreign short-term debt securities. The previous such survey, conducted as of year-end 2018, measured U.S. holdings of approximately $11.3 trillion, with $7.9 trillion held in foreign equity, $2.9 trillion held in foreign long-term debt securities, and $0.5 trillion held in foreign short-term debt securities. The increase in 2019 was mainly in equity (see Table 1).
U.S. portfolio holdings of foreign securities by country at the end of 2019 were the largest for the Cayman Islands ($2.00 trillion), followed by the United Kingdom ($1.52 trillion), Japan ($1.15 trillion), and Canada ($1.10 trillion) (see Table 2). These four countries attracted 44 percent of total U.S. portfolio investment, versus 45 percent the previous year. The surveys are part of an internationally coordinated effort under the auspices of the International Monetary Fund (IMF) to improve the measurement of portfolio asset holdings.
TABLE 1. U.S. HOLDINGS OF FOREIGN SECURITIES, BY TYPE OF SECURITY, AS OF SURVEY DATES [1]
(Billions of dollars)
Type of Security
December 31, 2018
December 31, 2019
Long-term Securities
10,793
12,617
Equity
7,899
9,478
Long-term debt
2,894
3,139
Short-term debt securities
502
470
Total
11,295
13,087
U.S. PORTFOLIO INVESTMENT BY COUNTRY
Table 2. Market value of U.S. portfolio holdings of foreign securities, by country and type of security, for countries attracting the most U.S. investment, as of December 31, 2019 [1]
(Billions of dollars)
Country or category
Total
Equity
Debt
Total
Long-term
Short-term
Cayman Islands
2,000,801
1,501,486
499,315
494,479
4,836
United Kingdom
1,517,165
1,013,549
503,616
411,510
92,106
Japan
1,147,091
926,921
220,171
164,225
55,946
Canada
1,097,840
592,702
505,138
394,631
110,507
France
661,756
468,257
193,499
167,974
25,525
Ireland
647,745
560,508
87,237
78,236
9,001
Switzerland
596,729
551,901
44,828
42,195
2,633
Netherlands
572,862
370,537
202,324
188,336
13,988
Germany
467,164
380,907
86,257
70,437
15,820
Australia
366,041
201,612
164,429
120,589
43,840
Bermuda
274,844
239,412
35,431
35,397
34
Korea, South
231,202
211,615
19,588
19,354
234
China, mainland (1)
222,282
204,252
18,030
15,197
2,833
Taiwan
214,872
214,803
69
69
0
India
200,659
185,107
15,552
14,547
1,005
Brazil
197,708
168,530
29,178
28,624
554
Hong Kong
180,713
170,834
9,879
7,219
2,660
Spain
162,493
115,112
47,381
44,210
3,171
Luxembourg
156,693
81,251
75,442
71,923
3,519
Sweden
155,408
110,172
45,235
29,852
15,383
Rest of world
2,015,293
1,208,546
806,748
740,466
66,282
Total
13,087,361
9,478,014
3,609,347
3,139,470
469,877
* Greater than zero but less than $500 million.
Items may not sum to totals due to rounding.
[1] The stock of foreign securities for December 31, 2019, reported in this survey may not, for a number of reasons, correspond to the stock of foreign securities on December 31, 2018, plus cumulative flows reported in Treasury’s transactions reporting system. An analysis of the relationship between the stock and flow data is available in Exhibit 4 and the associated text of “U.S. Portfolio Holdings of Foreign Securities as of End-December 2019.”
[2] China, Hong Kong, and Macau are all reported separately.
