Morning Report – Monday 30th November
Jon Robson, Head of Trading
“Reports over the weekend suggest a Brexit deal could be announced this week. This is reflected in Sterling which is well supported and continues to find buyers on dips. However, demand for downside exposure through options increases as premiums reach two month highs.”
The UK is set to approve the Pfizer/BioNTech vaccine for use in a few weeks, with the US to follow suit in due course. This is in line with the expectation that the vaccine rollout can start by mid-December, with the aim to begin before Christmas.
British officials believe that some Brexit progress has been made over the weekend, especially on EU fishing rights, and senior officials think that if progress continues, a deal can be struck within a few days. Expect some political posturing in the meantime.
The pound is higher against both the euro and dollar in early morning trading today, as Brexit negotiations seem to be nearing an end, although it is worth remembering that nothing is agreed until everything is agreed. There is no major economic data release today so markets will be focused on how Brexit discussions pan out.
The euro is unchanged against the dollar in trading this morning. The FT reports that the EU is trying to make amends with the US after a chaotic past four years with Trump at the helm. The EU’s focus is on forging a global alliance to combat China’s rising power. Covid-19 cases continue to fall, and new infections in France are at their lowest in eight weeks, signifying the national lockdown across the continent seems to be working.
The dollar is mostly unchanged against a set of major currencies including the Japanese Yen. Trump spent the weekend campaigning for the Republicans in Georgia where a Senate run-off election will decide the composition of the Senate. The day is light on economic data, except Chicago PMI’s which will likely show a moderate increase in economic activity after a huge rise for October.
Global stocks are likely to finish November with the biggest monthly gain since the 1980’s. Markets have increasingly priced in a vaccine rollout by mid-December and a return to rosy economic outlook by Spring 2021. However, it is not all positive news, as some investors are still looking to bonds, where yields have fallen and Oil prices declined after posting 3-month highs yesterday.
Main Economic Data/Central Banks/Government (All times GMT)
8:00 a.m.: Spain Nov. CPI
9:30 a.m.: U.K. Oct. Mortgage Approvals, Consumer Credit
10:00 a.m.: ECB’s Lagarde speaks
10:00 a.m.: Italy Nov. CPI
1:00 p.m.: Germany Nov. CPI
2:00 p.m.: Israel Rate Decision
2:30 p.m.: BOE’s Tenreyro speaks
Euro-area finance ministers meet
NATO foreign ministers hold a videoconference
OPEC+ meeting (Day 1 of 2)