Economic Releases

Monday 25/01
9.45pm, EUR, ECB President Lagarde Speaks

Tuesday 26/01
5.15am, EUR, ECB President Lagarde Speaks

Wednesday 27/01
4am, USD, CB Consumer Confidence
Forecast 88.9
Previous 88.6
1.30pm, AUD, CPI q/q
Forecast 0.7%
Previous 1.6%
1.30pm, AUD, Trimmed Mean CPI q/q
Forecast 0.4%
Previous 0.4%

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Direct FX

USD Weakness

Worldwide coronavirus cases surpass 97.4 million with over 2,087,000 official deaths.

Currency markets have been relatively subdued over the past week with the broad theme of USD weakness still very much in play. US equity markets remain well supported with the S&P 500 trading to an all-time high in recent days. Markets are keen to see details about Biden’s fiscal spending package, but it’s fair to say most expect it to undermine the USD further over the coming months. Biden’s advisers have also been signalling to Wall Street donors that tax increases will likely come later in the year, but these may depend on the economic recovery and Covid’s impact on the economy. To that end we saw some mixed data from the US overnight. On the positive side the Philly Fed Manufacturing index showed solid gains jumping to 26.5 from 11.1 prior. But countering this was the harsh reality of the employment situation with weekly unemployment claims remaining above 900k. 

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Risk appetite wanes as equities come off early 2021 highs.

Worldwide coronavirus cases surpass 95.7 million with over 2,044,000 official deaths.

Key Points:

• Brexit has been agreed on the 30th December between UK and EU lawmakers but issues are still a plenty with many problems in fisheries
• US Holiday saw quiet markets Monday with Martin Luther King Day
• Iron Ore markets continue to break records after Chinese steel productions hit fresh highs
• Chinese 4th quarter GDP slides short of estimates but overall the economy expanded by 2.0% in 2020 while the rest of the world suffered through the coronavirus pandemic

Major Announcements last week:

  • US Retail Sales prints lower at -1.4%, -0.1% expected
  • US bank holiday (MLK) slows markets Monday
  • China have fresh lockdowns after a new coronavirus outbreak
  • Iron Ore prices hit record levels

NZD crosses trade near highs

Worldwide coronavirus cases surpass 77.68 million with over 1708,000 official deaths.

Key Points:

• 900B US bailout package unveiled by US lawmakers to aid jobless Americans.
• Asian stocks dipped today after U.S. equities joined a global decline as a new variant of the coronavirus in the U.K. and a wave of lockdowns and travel restrictions hurt sentiment.
• The UK has had its borders with most European countries closed, with no traffic passenger or freight, going across the channel by tunnel or ferry.
• Australia preliminary November Retail sales data has been released showing a much better than forecast +7%m/m against an expected +2%
• The UK looks at widening Tier 4 restrictions across the country as cases of the mutant Covid multiply at rates not seen since April.
• The US has brought in further additional visa restrictions on Chinese officials

Major Announcements last week:

  • French and German Manufacturing released well
  • NZ Retail Sales -1.1% for November down on -0.3% predicted
  • FOMC leave rates unchanged
  • Australian Unemployment drops from 7.0% to 6.80%
  • US Final GDP third Q 33.1% 
Ian Dobbs

FX News

Worldwide coronavirus cases surpass 75.17 million with over 1,666,000 official deaths.

Key Points:

  • Germany has seen a record number of deaths Wednesday, the first day of new partial lockdowns with a total of 952 people dying.
  • New Zealand Trade Balance for November 252M vs 255M expected
  • The UK are bracing for tier 3 lockdown restrictions as mounting pressures in parliament mount to prevent Christmas closures and further restrictions. 
  • Progress in the Brexit negotiations is slow, but a deal of sorts looks like it could be in the throes of being confirmed before the 31 December deadline. Johnson says they are making efforts to accommodate EU requests in the short time they have left.
  • US congress is close to closing in on a 900B COVID-19 relief stimulus plan. 12M people stand to lose their unemployment benefits on the 26th of December if a deal fails to make law.
  • New Zealand Consumer Confidence rose to 4.8% from -1.7% prior
  • 885,000 people filed for unemployment in the US last week, a rise of 30,000 from the prior week, an alarming trend given the rise of coronavirus cases. Deaths are now over 17M 
President Trump

Biden won- Trumps gone

Worldwide coronavirus cases surpass 73.1 million with over 1,626,000 official deaths.

Key Points:

• Europe has announced further coronavirus restrictions in the wake of record-breaking new cases and deaths recently.
• Germany has also been struggling to contain a fresh wave of coronavirus cases advising workplaces to close down as they start a new lockdown phase tomorrow.
• The UK are bracing for tier 3 lockdown restrictions as mounting pressures in parliament mount to prevent christmas closures and further restrictions.
• Progress in the Brexit negotiations remains touch and go with the deadline again being extended by another week as 31 December D day looms.
• US lawmakers have unveiled a 748B stimulus package compromising the original 908B originally. This separates out the sticky points of the deal so that the new amount could be agreed by Congress.
• New Zealand “consumer confidence” jumped Monday to 106 vs 95.4 prior- back at the 2019 average indicator.
• Crude Oil forecasts for first quarter 2021 have been downgraded by OPEC as hard lockdowns take effect.

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Economic Releases

Wednesday 16/12

  • 915pm, EUR, French Flash Services PMI
    • Forecast 39.1
    • Previous 38.8
  • 930pm, EUR, German Flash Manufacturing PMI
    • Forecast 56.2
    • Previous 57.8
  • 930pm, EUR, German Flash Services PMI
    • Forecast 44.1
    • Previous 46
  • All Day, All, OPEC-JMMC Meetings
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FX Overview

Worldwide coronavirus cases surpass 70.5 million with over 1,584,000 official deaths.

Both the EUR and GBP have underperformed over the past 24 hours as chances of a Brexit trade deal look increasingly slim. Boris Johnson himself said overnight it’s more likely there will be no deal. He added the trade deal on the table is not right for the UK and they should prepare for no EU trade deal after Brexit. Negotiations have been extended until Sunday but barring a major change in attitude from both sides, it seems the dreaded “hard Brexit” is about to come to fruition. The market has started to price this in with the Pound Sterling suffering more than the Euro. We expect the first few hours of trading on Monday morning could be very volatile as the usual thin market liquidity conditions at that time of the week, magnify any potential currency moves. 

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FX Update

Worldwide coronavirus cases surpass 67.7 million with over 1,547,000 official deaths.

Key Points:

  • The DOW slipped from its record high amid spikes in US coronavirus cases
  • Crude Oil falls to 45.00 a barrel after US -China tensions
  • EU’s Barnier has offered a fairly sombre picture of Brexit talks and movement in negotiations.  
  • German Industrial Production rose in the six months to October 2020
  • UK House Prices show the biggest annual rise since 2016
  • China bans meat imports from 6 Australian beef suppliers as ties between the two countries deteriorate further
  • US congress look to be close to signing a deal worth 900B in a new bail-out package