China will ramp up fiscal support for consumption next year by raising pensions and medical insurance subsidies for residents as well as expanding consumer goods trade-ins, its finance ministry said on Tuesday.

The country will boost the basic pension for retirees and for urban and rural residents and raise financial subsidy standards for urban and rural residents’ medical insurance to help “vigorously” boost consumption, the ministry said after concluding a two-day national fiscal work conference.

China will also intensify support for consumer goods trade-ins and expand effective investment and drive more social investment through government investment, the ministry said.

The measures will improve people’s livelihoods and the policy system to support population growth as well as strengthen the social security network and health care system, it said.

Fiscal spending will enhance technological innovation capabilities and fully support the research and development of key core technologies and promote industrial upgrading, the ministry added.

At an agenda-setting meeting this month, Chinese leaders pledged to increase the budget deficit, issue more debt and loosen monetary policy to maintain a stable economic growth rate as it girds for more trade tensions with the U.S. when Donald Trump returns to the White House.

Chinese authorities have agreed to issue 3 trillion yuan ($411.04 billion) worth of special treasury bonds next year, Reuters reported on Tuesday, citing two sources. That would be the highest on record as Beijing ramps up fiscal stimulus to revive a faltering economy.

Thanks to gains in many of the Magnificent Seven tech stocks.

Reuters reported last week that Chinese leaders have agreed to raise the budget deficit to 4% of the gross domestic product next year, its highest on record while maintaining an economic growth target of around 5%.
($1 = 7.2985 Chinese yuan renminbi)

The dollar defended its recent dominance on Tuesday in a holiday-lined week, as investors considered the prospect of higher-for-longer US interest rates, leaving other major currencies struggling near milestone lows.

The US dollar has leaped ahead over the past three months against a basket of currencies, fuelled by diverging central bank outlooks.

After its policy meeting on Wednesday, the U.S. Federal Reserve now looks set to hold rates higher for longer than markets had expected, elevating U.S. Treasury yields and sending the currency 1.2% up to two-year peaks.

Trading volumes are likely to thin out this week as the year-end approaches and major economic data releases are scarce, meaning the rates theme is likely to remain the main driver of moves in the foreign exchange market.

The dollar index held up firm on the day, 0.1% higher at 108.2, still hovering close to the two-year high of 108.54 it reached on Friday.
Other currencies took a breather on Tuesday, but the impact of the dollar’s recent rally was still felt across the board.

The euro was last bought at $1.0393, slightly lower on the day and not far from November’s two-year low, while sterling hovered around a one-month low at $1.2532.

Elsewhere, the yen was pinned near a five-month low and last stood at 157.04 per dollar, having already fallen close to 5% this month into territory that is keeping traders on alert for any intervention from Japanese authorities.

The Bank of Japan (BOJ) last week kept rates on hold and stayed vague on when it could next raise them. The central bank communication stood in stark contrast to the Federal Reserve’s hawkish tone a day earlier, when it projected a measured pace of rate cuts in 2025, sending the yen sliding.

“The shifts in Fed-BOJ policy divergence are now more likely to weaken the JPY,” said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Bank.

“JPY carry trades could, in defiance of a step-up in volatility or uncertainty, remain in play as two critical factors – supported ‘carry returns’ and mitigated capital risks of JPY squeeze – conspire favourably.”

Down Under, the Australian dollar eased 0.19% to $0.6237, while the New Zealand dollar dipped 0.16% to $0.5641.

The Reserve Bank of Australia (RBA) released the minutes of its December policy meeting on Tuesday, which signalled the central bank was closer to cutting interest rates, but needed the flow of economic news to support its confidence that inflation was slowing.

DOLLAR AHEAD

The greenback looked set to end the year more than 6% higher, after falling back last year.

While a benign U.S. inflation reading on Friday eased concerns about the pace of Fed cuts next year, markets are still pricing in just about 35 basis points worth of easing for 2025, in turn underpinning the dollar.

“Our base case is that the dollar will make some further headway next year as the U.S. continues to outperform, the interest rate gap between the U.S. and other G10 economies widens a little further, and the Trump administration brings in higher U.S. tariffs,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.

Ahead of U.S. President-elect Donald Trump’s return to the White House in January, global central banks have urged caution over their rate paths due to uncertainty on how Trump’s planned tariffs, lower taxes and immigration curbs might affect policy.

Goldman Sachs said it was uncertain how tariffs could affect future Fed policy, adding that the inflation impact of price increases should fade after a year.

“The 2018-2019 trade war tightened financial conditions by enough to prompt an easing in Fed policy,” Goldman Sachs added.

“Much about the current cycle is different, but the 2018-2019 experience shows that the monetary policy risks from tariffs are at a minimum two-sided.”

Opponents of abortion are increasingly focusing on restricting access to pills, which are the most common way to end a pregnancy in the U.S.

This month, the Texas attorney general’s office filed a lawsuit against a New York doctor, saying she violated Texas law by prescribing abortion pills to a patient there via telemedicine. The suit represents the first lawsuit of its kind and could lead to a legal test for the New York law designed to protect providers there who prescribe the drugs to patients in states with abortion bans.

Anti-abortion officials are taking other steps, too, through legislation and lawsuits.

Abortion rights advocates are also concerned that President-elect Donald Trump’s administration could take action to restrict access if it chose to.

Pills are the most common means of abortion

By the time the U.S. Supreme Court overturned Roe v. Wade in 2022 and opened the door for states to ban abortion, over half of all abortions were obtained using medication, usually a combination of the drugs mifepristone and misoprostol.

The drugs are different than Plan B and other emergency contraceptives that are usually taken within three days after possible conception, weeks before women know they’re pregnant. Studies have found they’re generally safe and result in completed abortions more than 97% of the time, which is less effective than procedural abortions.