This week Trump became the first president in American history to be impeached twice, Biden is about to take office, and Washington has entered a state of emergency. The U.S. dollar rebounded strongly this week, and the rise in U.S. bond yields became a major driving force. Although Powell's dovish remarks brought pressure, the steadily rising dollar especially suppressed the euro. The euro/dollar fell this week and fell below the 1.22 and 1.21 barriers.

Currency Watch this week:
The US dollar officially rebounded this week, standing above the 90 mark and closing at 90.77. The new US President Biden announced a US$1.9 trillion "US rescue plan". After the announcement of the stimulus plan, the US dollar index rose instead of falling and set a new high of 90.76 this week; the rise in US Treasury yields supported the US dollar. Rebound.
The euro fell 1.21% against the US dollar in a week, which was the biggest weekly decline since October; resource-based currencies fell along with commodities. Some central bank meetings will begin this week.

The British pound against the US dollar fluctuated sharply at 250 points this week. Although the British economy seems likely to return to recession, the Bank of England Governor Bailey has cooled down expectations of negative interest rates, and the UK's vaccination schedule is ahead of European countries, providing support for the exchange rate.
The U.S. dollar against the Canadian dollar has risen by 0.3% this week, and the one-cycle implied volatility rose to 7.25%. The Bank of Canada will hold a policy meeting next week.

Biden launches nearly $2 trillion in stimulus:
The US President-elect Biden announced this week a $1.9 trillion aid proposal aimed at alleviating the new crown epidemic and its economic shock, including $20 billion in vaccine distribution funds and $50 billion in testing funds. Compared with the $982 billion plan passed in December last year, Bidenís proposal more than tripled the funds allocated to state and local governments for vaccine distribution.
Analysts expect that the scale of stimulus will be increased under Biden, especially after the Democratic Party seized control of the Senate last week, which will make it easier for the further aid bill to pass in Congress.

However, the amount of the stimulus spending check will be $1,400. Although it is higher than the $600 issued by Congress in the previous stimulus legislation, it is less than the $2,000 expected by the market-the amount that the current President Trump also supports. Many Republicans in Congress have objections to expanding the amount of stimulus checks, although Democratic control of the Senate and the House of Representatives will reduce the resistance to the passage of the bill. But Biden's proposal will face similar obstacles.
Under normal circumstances, additional spending plans will prompt investors to worry about rising inflation and the adverse impact of rising inflation on the dollar in the case of economic weakness. However, the factors that stimulate spending have been digested by the market, and the increase in the amount of stimulus checks is not as strong as expected. Whether the dollar will be as weak as people expected is still open to question.

Trump was twice impeached:
On January 13th, the U.S. House of Representatives formally accused President Trump of inciting rebellion and passed an impeachment bill, making him the first president to be impeached twice in U.S. history, and is likely to be the first to face impeachment trial after leaving office. president. The House of Representatives passed an impeachment clause-the official charge-accusing Trump of "seditioning rebellion", mainly against the inflammatory speeches he made to thousands of supporters before Congress was forced by Trump supporters .

According to the U.S. Constitution, after the House of Representatives decides to impeach, the Senate will conduct a trial. The Senate needs a two-thirds majority to convict Trump and remove him. This means that out of 100 senators, at least 17 Republicans and Democrats must vote in support. British Reuters said that before the end of Trump's four-year term and the swearing-in of the Democratic President-elect Biden on January 20, the impeachment case passed unusually quickly seems unlikely to lead to Trump's resignation.

Trump intensifies crackdown on China:
The U.S. Department of Defense issued a statement on January 14, 2021, stating that it will add nine more Chinese companies to its blacklist "related to the Chinese military." The 9 companies are the aircraft manufacturer COMAC, mobile phone manufacturer Xiaomi, Zhongguancun Development Group, Luokung Technology Company, China Micro Semiconductor Equipment (Shanghai) Co., Ltd., Guangdong Gowin Semiconductor Technology Co., Ltd., and Grand China Aviation Co., Ltd. , GTCOM Technology Co., Ltd. and China National Aviation Group Co., Ltd.

The aforementioned Chinese companies will be subject to a new investment ban in the United States, which requires American investors to sell their shares in the aforementioned companies before November 11, 2021. As of the end of 2020, the US Department of Defense has included 35 Chinese companies on the blacklist "related to the Chinese military", including Huawei, Hikvision, China Telecom, SMIC, and CNOOC.

The US Department of Commerce also issued a statement on January 14 to include China National Offshore Oil Co., Ltd. on the list of entities and Beijing Tianjiao Aviation Industry Investment Co., Ltd. on the list of "military end users" (MEU) on the grounds that they threaten US national security. The statement stated that CNOOC helped the Chinese government to intimidate neighboring countries in the South China Sea, while Beijing Tianjiao was blacklisted for its ability to develop, produce or maintain military projects, such as the production of military aircraft engines.

The US State Department also issued a statement on January 14 announcing that it will take more actions on the South China Sea issue, including imposing visa restrictions on senior executives of Chinese state-owned enterprises and officials of the Chinese Communist Party and the Chinese Navy who are connected with maritime disputes. The immediate family members of these executives and officials may also be subject to these visa restrictions. The statement stated that the United States stands with Southeast Asian claimants seeking to defend its sovereignty and interests in accordance with international law and will continue to take actions until Beijing ceases its coercive actions in the South China Sea.
The introduction of these policies is less than a week away from the Trump administrationís departure and Bidenís inauguration. Many policies depend on the new administration to implement. Reuters reported on January 14 that this was the Trump administrationís final blow to China and Chinese companies.

Currency outlook:
Outlook for the U.S. dollar and shifted to a neutral strategy in the near term. The bank stated that it has adopted a neutral stance towards the U.S. dollar in terms of strategy, but expects that the U.S. dollar's bearish theme will reappear later this year, as the recovery in global trade boosts the demand for procyclical currencies such as the euro and the global economy recovers. The expansion of the US dollar once again promoted the diversified flow of the dollar. The outside world will pay close attention to Biden's inauguration next week and Yellen's confirmation hearing as the U.S. Treasury Secretary to further understand the new administration's future policies.

According to a survey conducted by the Bank of America, investors still like bearish US dollar transactions and should take advantage of the exchange rate correction to increase short selling. 36% of respondents liked this transaction, which was higher than the 30% in December, second only to long-credit transactions. Approximately 33% of respondents said that it is too early to consider when the dollarís ​​recent decline will end; they said that the dollarís ​​weakness is structural and there is still room for decline. Approximately 22% of respondents believe that when the US economic recovery is clearly stronger than the rest of the world, the selling pressure will ease.