Bloomberg (Jesse Hamilton): “Steven Mnuchin indicated he might not give Wall Street everything it wants as Treasury Secretary, saying at his confirmation hearing Thursday that he supports the controversial Volcker Rule and that there might be merit in bringing back some version of the Glass-Steagall Act.
Reuters (Winni Zhou and John Ruwitch): “China should stop intervening in the foreign exchange market, devalue the yuan and let it float freely to restore stability, a senior researcher at a government-backed think tank said. Xiao Lisheng, a finance expert with the Chinese Academy of Social Sciences, made the remarks… in the official China Securities Journal amid a growing debate among the country’s economists on whether authorities should let the closely-managed currency trade more freely. The yuan lost 6.6% against the dollar last year, the biggest annual loss since 1994. ‘The more the government delays the release of depreciation pressure, the greater the impact and destructive power of the release of depreciation pressure will be,’ Xiao wrote. The authorities should ‘let the yuan exchange rate have a one-off adjustment to realize a free float’ of the currency, he said.”
The U.S. dollar was lower against all G-10 currencies this morning as traders became increasingly nervous President Donald Trump will pursue protectionist trade policies following his inauguration speech on Friday. Emerging market stocks and currencies also gained, and are headed for the highest level in 11 weeks. Analysts are watching the yen to gauge whether early Trump optimism is waning, with the 115 yen to the dollar level seen as an inflection point. The weaker dollar and policy uncertainty is also lifting gold, which was at $1213.27 an ounce at 5:13 a.m. ET.
At 4:30 a.m. ET tomorrow the U.K. Supreme Court will rule on whether parliament or the government can trigger Article 50 of the Lisbon Treaty to start the two-year countdown to the Britain’s exit from the European Union. On Thursday, U.K. GDP data for 2016 will be released. Economists expect the economy performed well in the period, despite the referendum. Prime Minister Theresa May will become the first foreign leader to meet the new president on Friday, when she is due to visit the White House.