2020 deal impossible

GBP

The Pound had another choppy day, the early buying boost reversed sharply before the US came online at midday. Peaking near 1.3170 against the Dollar the Pound dipped close to 1.3100 but did make gains on the Euro, peaking near 1.1835 before a Euro recovery. Sterling struggled to take advantage of improved risk appetite during the day and the major UK equities stalled as oil and gold stocks dipped sharply. 

EU Commission President von der Leyen (replaced JC Junker) stated prioritisation was imperative as it would be impossible to negotiate a full trade deal by the end of 2020. In this context, she stated that it was not an all or nothing approach. By the close, Sterling had settled near 1.3100 against the Dollar and near 1.1800 on the EURO. Overnight, UK British Retail Consortium retail sales data showed improvement in December and Barclaycard data indicated increased consumer confidence enabling modest Sterling gains. 

USD

US ADP data recorded an increase in private-sector jobs of 202,000 for December, well above consensus forecasts of 160,000 and there was a notable upward revision for the November data to 124,000 from 67,000. The data boosted confidence in a robust monthly jobs report on Friday and also supported the US dollar. Overall, the US currency made significant headway during the day with a push to 2020 highs as European currencies faded again. 

There were again no comments on monetary policy from Federal Reserve (Fed) officials and, although there are speakers scheduled to speak on Thursday, there are no expectations of a change in interest rates at this month’s policy meeting.

EUR

The Eurozone economic sentiment index improved slightly to 101.5 for December from a revised 101.2 previously with a significant advance in services sentiment offset by a small dip in industrial confidence which caused little if any impact on the market.

German yields moved significantly higher yesterday with a narrowing of yield spreads, but the Euro was unable to make any headway as the currency steadily lost ground to 2020 lows near 1.1100 where it still currently sits this morning. German industrial production increased 1.1% for November, above expectations of 0.7%, although there was a decline in exports. 

Data to watch

09:30 – GBP – BOE Gov Carney Speaks 

13:00 – USD – FOMC Member Clarida Speaks 

14:30 – USD – FOMC Member Kashkari Speaks

18:00 – USD – 30-y Bond Auction