COVID-19 still poses major challenges to many economies in early 2021. For instance, over the weekend, Japan Prime Minister Yoshihide Suga announced that he is considering declaring a state of emergency in Tokyo and surrounding cities, as the number of coronavirus cases in the country is at an all-time high. To add to that, the start of vaccination in Japan is expected only at the end of January this year, therefore, the prime minister said the government will consult with an advisory group before finalizing the plan for declaring an emergency. Other details about it were not mentioned, but Suga once again urged people to avoid unnecessary walks and said that a new, tougher bill aimed at combating COVID-19 would be discussed by parliament at the first meeting.
According to some sources, this state of emergency may be declared this week and will last for about a month.
But despite that, the Japanese yen continues to strengthen its position as a safe-haven asset, rising against risky assets who are in turmoil because of many factors.
In another note, the US Congress has approved a new stimulus, and the main target of which is to support the US economy and the population.
Many have said in a poll that they want their governments to spend more on helping their economies to survive the coronavirus, as the dismal financial outlook for many households this 2021 makes them look ahead with apprehension.
The survey also indicated that consumer sentiment has decreased sharply for 2021, and this is due to the fact that people do not receive adequate assistance from the governments. In particular, more than 22,000 said they are ready to cut spending on entertainment, clothing and food this year, as they expect higher living costs and lower incomes in 2021. The report also showed that many consumers are expecting an increase in spending, as well as in government debt, along with record budget deficits due to the coronavirus crisis. At the moment, many governments have already committed hundreds of billions of dollars to support their economies.
In the survey, 12 out of 15 countries interviewed favors an increase in debt in order to raise budget spending, and only the citizens of Poland and Mexico were against it. About 50% supported a growth in government spending, while 31% preferred to keep spending under control.
Another interesting news was the attempt of Republican senators to challenge Joe Biden's formal approval as the winner of the US presidential election. However, many experts believe that the movement will fail, even if House Minority Leader Kevin McCarthy supported this attempt.
With regards to economic reports, the latest data on the US labor market shows that the approved stimulus programs have seriously influenced Americans to seek new jobs in the country. As a result, applications for unemployment benefits have decreased sharply for the week of December 20-26, reaching only 787,000 of initial jobless claims.
As for the EUR/USD pair, bulls need to break the resistance level of 1.2270, as only such will allow the euro to rise to 1.2310, and then to 1.2360 and the 24th figure. But if the demand for the euro decreases, the quote will collapse to 1.2170, and then drop to 1.2130.
Today, a series of economic reports are expected to be released from many countries. One example is China's, which was already published this morning and indicated that Manufacturing PMI in the country has declined in December as expected, but continues to signal a growth in the industry. The index came out at 51.9 points against its 52.1 points in November, in which the production sub-index fell to 54.2 points, while the new orders sub-index dropped to 53.6 points.
During the European session, the same reports are expected from France, Italy, Germany and the whole of the eurozone, while in the afternoon, data from the United States will be released. Activity in these countries is expected to remain either at their current levels, or show a slight increase.
