- The E.U. and U.K. are continuing Brexit deal talks, with 31st December now the remaining legal deadline. If a deal is not agreed before the end of 2020, the U.K. will trade with the E.U. on World Trade Organization rules, meaning there will be new tariffs on imports from both sides, which will negatively impact the GBP and, to a lesser extent, the EUR. As the talks continue, the pound is rising strongly.
- Global stock markets rose a little yesterday, with most “risk” assets higher against the U.S. dollar. However, the main story is dollar weakness, with the Japanese yen advancing firmly against the USD. Both the EUR/USD and GBP/USD currency pairs closed yesterday at new long-term high closing prices, suggesting that further upwards movements are likely over the coming days.
- Several important economic data releases are due today, most notably the FOMC’s monthly projections and rate, but we will also get U.S. retail sales data, New Zealand GDP numbers, and Australian employment data. This means volatility is likely to be unusually high towards the end of today’s New York session.
- Australia’s trade dispute with China is intensifying, with Australia now taking China to the WTO over their tariffs on Australian barley imports. The news has hardly affected the value of the Australian dollar so far.
- Global coronavirus deaths have increased dramatically since early October to reach a level approximately 90% higher than the peak last April. Coronavirus new cases and deaths have fallen from recent peaks in the European Union, but both are currently increasing strongly in the U.S.A. A new “hard” lockdown has just been imposed in Germany and is about to be imposed in the Netherlands, while London also faces new imminent restrictions. The U.S.A. is currently confirming more than 200,000 new cases daily and is now seeing almost 3,000 deaths per day.
- Total confirmed new coronavirus cases stand at over 73.4 million with an average case fatality rate of 2.23%.
- The rate of new coronavirus infections appears to now be increasing most quickly in Albania, Azerbaijan, Belarus, Burkina Faso, Canada, Colombia, Cyprus, Denmark, Egypt, El Salvador, Indonesia, Israel, Jamaica, South Korea, Liechtenstein, Malaysia, Netherlands, Panama, Russia, Slovakia, South Africa, Sri Lanka, the U.K., and Uruguay.