C$ firms as risk appetite rises on vaccine, Brexit optimism - Reuters News

• C$ strengthens 0.3% against a broadly weak greenback
• Vaccinations in Canada to start on Monday
• Canadian bond yields rise across the curve

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 14 (Reuters) - The Canadian dollar firmed against the U.S. currency on Monday, lifted by the greenback's broad weakness on optimism about a Brexit trade deal as well as continued progress in the roll-out of COVID-19 vaccines around the world.

So far this month, the Canadian currency has gained 2.2% against its U.S. counterpart.

Risk appetite grew overall after European Union Brexit negotiator Michel Barnier said on Monday that a trade agreement with Britain was still possible before the country's final break with the 27-nation bloc on Dec. 31. (Full Story)

"The willingness for EU and UK Brexit negotiators to continue trade talks, despite the passage of Sunday's soft deadline has been the major driver behind broad U.S. dollar weakness and USD/CAD's offered tone to start to the week," said Erik Bregar, head of FX strategy at Exchange Bank of Canada in a research note.

In early morning trading, the Canadian dollar rose against the U.S. dollar, with the latter falling 0.3% to C$1.2730 CAD=D3. Since late October, the Canadian dollar has risen 5%. 

Also helping the Canadian currency was news that Canada's first COVID-19 inoculations are set to begin as soon as Monday after some of the 30,000 doses of the Pfizer/BioNTech vaccine arrived over the weekend. (Full Story)

U.S. crude CLc1 futures rose 1.2% to $41.12 per barrel, helping the loonie's cause as well.

In the bond market, Canadian government bonds were higher across the board in line with U.S. Treasuries. The Canadian 10-year yield was up at 0.748% CA10YT=RR, from 0.716% late on Friday.

China's new home prices slow in November as market-cooling steps take hold - Reuters

• New home prices up 0.1% m/m in November vs 0.2% in October
• New home prices up 4.0% y/y in November vs 4.3% in October
• 36 of 70 cities reported higher prices, vs 45 in October

BEIJING, Dec 14 (Reuters) - China's new home prices grew in November at their slowest monthly pace since March, official data showed on Monday, as policymakers wary of financial risk in the highly leveraged sector continued to pursue market-cooling measures.

The data comes ahead of a slew of economic figures due for release on Tuesday, from which market watchers hope to determine the strength of recovery of the world's second-largest economy as the coronavirus-blighted year nears an end.

The average new home price across 70 major cities rose 0.1% in November from the previous month, Reuters calculated from National Bureau of Statistics (NBS) data. That compared with 0.2% on-month growth in October.

Prices rose 4.0% in November from the same month a year earlier, the weakest rate since February 2016. That compared with a 4.3% on-year increase in October.

The data also showed the number of those cities reporting monthly new home price increases fell to 36, from 45 in October - the lowest since February during the height of the pandemic in China, said analyst Zhang Dawei at property agency Centaline.

Zhang attributed the softening momentum to stepped-up market tightening policies, as well as increased supply and discounting as developers ramped up sales activity towards year-end.

China's property market has recovered quickly from the COVID-19 pandemic, with home sales and investment growing at a robust pace, prompting the government to step up efforts to deleverage the highly indebted sector to curb financial risk.

However, price rises are uneven and concentrated in the southern Pearl River Delta and eastern Yangtze River Delta. In the north, some cities have seen demand slump after an initial spurt, prompting authorities to act to prevent a market crash.

The government of Harbin in Heilongjiang province has told developers to lower prices, while that of Binzhou in Shandong province plans to distribute "real estate coupons" to help offset home-buying tax.

China's banking regulator recently highlighted the property sector as a significant risk to financial stability, branding it a "grey rhino" - an obvious yet ignored threat. (Full Story)

As the economy recovers to a more solid footing, analysts expect the government to continue its tough stance towards the sector, with increased scrutiny on the financing activity of both developers and buyers to prevent rampant lending growth.

"We expect the real estate market policy in 2021 will be marginally tighter than this year," said Xie Chen, head of research at advisory CBRE China. "We expect new home construction and sales to fall slightly in 2021 from this year, while home prices are likely to remain largely stable."

Euro zone October industry output up 2.1% m/m - Reuters News

Dec 14 (Reuters) - Euro zone industrial production increased by 2.1% in October from the previous month, data from the European Union statistics agency Eurostat showed on Monday.

Industrial production - monthly variation

% change compared with previous month (seasonally adjusted)

Industrial production - annual variation

% change compared with same month of the previous year (working day adjusted)