Morning Report – Monday 14th December
Jon Robson, Head of Trading
“As deadline after deadline gets extended, the notion that both sides have an interest to take Brexit negotiations to the wire is becoming more ostensible. With volumes reducing going into the holiday period, there will be further volatility as liquidity deteriorates.”
Boris Johnson and Ursula Von der Leyen decided to “go the extra mile” and continue Brexit discussions in the run up to Christmas, although both said that the sides are still far apart on critical issues.
UK Government officials are worried about how relaxing of Coronavirus restrictions will increase the infection rate in the weeks after Christmas. The US are seeing a record high daily case count after Thanksgiving travelling, and some European countries have taken the initiative by maintaining or increasing restrictions in the lead up to and after Christmas.
The pound is significantly higher against the euro and dollar in early morning trading due to the positive news that came out of Brussels yesterday. No new target date was set which the cynics will say gives senior officials an excuse to kick the can down the road until the transition period ends on December 31st.
The euro is higher against the dollar in trading this morning. The EU is ready to drop its demand for the right to use “lightning tariffs”, according to the Telegraph which is a big step for the issue of UK sovereignty, but even so big gaps remain. In what is a sparse data docket for the day, the only thing of note is that ECB member Pablo Hernandez de Cos is set to speak today on the economy.
The dollar is lower against a set of major currencies, although is mostly unchanged against the Japanese Yen. A bipartisan group of Senators will table a fiscal stimulus bill worth $908 billion in Congress, with no assurances it will be passed. It is likely that Republican Senators led by Mitch McConnell will cause the bill to be dead on arrival. The US Electoral College is also set to nominate Joe Biden today as the next US President which will “officially” spell the end of Donald Trump’s legal campaign.
US and European equities climbed in the early hours as investors are buoyed by progress on fiscal stimulus and the scheduled deployment of the vaccine this week. The higher pound deflated FTSE 100 stocks which are currently trading lower. Oil prices rose amid optimism that there will be a recovery in fuel demand while bond yields are mostly unchanged.
Main Economic Data/Central Banks/Government (All times GMT)
7:00 a.m.: Germany Nov. Wholesale Price Index
7:00 a.m.: Turkey Oct. Industrial Production
7:45 a.m.: ECB’s de Cos speaks
10:00 a.m.: Euro-Area Oct. Industrial Production
U.S. Electoral College meets to vote for next president
OPEC Oil Market Report