The Week Ahead – Post-Brexit, the Senate Race, and Economic Data in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 58 stats in focus in the week ending 8th January. In the week prior, just 15 stats had been in focus.

For the Dollar:

It’s a relatively busy week ahead on the economic data front.

December ISM Manufacturing and Service PMI figures for December are due out on Tuesday and Thursday.

While we expect sensitivity to the manufacturing numbers, the Services PMI will be the key driver.

Expect initial jobless claims figures on Thursday to also draw attention ahead of December NFP numbers on Friday.

With labor market numbers in focus, expect nonfarm payroll figures and the unemployment rate to have the greatest impact.

Other stats include ADP nonfarm employment change, finalized Markit private sector PMI numbers, and factory orders.

The Dollar Spot Index ended the week down by 0.32% to 89.937.

For the EUR:

It’s a particularly busy week ahead on the economic data front.

December manufacturing PMI figures for Spain and Italy are due out at the start of the week.

Expect Italy’s manufacturing PMI to draw the greatest interest. With finalized manufacturing from France, Germany, and the Eurozone also due out, any revisions will also provide direction.

On Tuesday, the focus shifts to retail sales and unemployment figures from Germany.

With consumption key to economic recovery, both will provide the EUR with direction.

On Wednesday, Service sector PMIs for Italy and Spain are due out along. Barring dire numbers, however, the focus will be on finalized numbers from France, Germany, and the Eurozone.

Through the 2nd half of the week, the German economy remains in the spotlight.

November factory orders, industrial production, and trade data are due out on Thursday and Friday.

On Friday, French consumer spending figures for November will also draw attention.

While there will be sensitivity to the stats, the markets may be in a forgiving mood.

The ongoing vaccinations across the EU and beyond and optimism towards the economic outlook will likely limit the impact of any disappointing numbers.

Other stats due out include inflation figures from Germany and Italy and retail sales and unemployment numbers for the Eurozone.

These stats are unlikely to have an impact on the EU, however.

The EUR ended the week up by 0.18% to $1.2215.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar. Key stats include finalized private sector PMI numbers for December and construction PMI figures.

Expect any revisions to the services PMI to have the greatest influence.

Other stats include December house price and 3rd quarter labor productivity figures. We would expect the numbers to have a muted impact on the Pound, however.

COVID-19 and updates from Europe on Britain’s 1st week away from the EU will influence.

The Pound ended the week up by 0.83% to $1.3672.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

November’s RMPI is in focus on Tuesday ahead of trade data and December’s Ivey PMI on Thursday.

While we expect some influence from the numbers, December employment figures on Friday will likely have the greatest impact.

From elsewhere, private sector PMIs will influence sentiment towards the economic outlook. The knock-on effects on crude oil prices would also provide the Loonie with direction.

The Loonie ended the week up by 1.06% to C$1.2728 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively quiet week on the economic data front.

November building approval and trade figures are due out on Thursday.

With no other stats to consider, expect the trade figures to garner the greatest interest.

From elsewhere, private sector PMI numbers will also influence market risk sentiment and the Aussie Dollar.

The Aussie Dollar ended the week up by 1.17% to $0.7694.

For the Kiwi Dollar:

It’s another particularly quiet week ahead on the economic calendar. There are no material stats due out to provide the Kiwi Dollar with direction.

Private sector PMIs through the week will influence, however.

The Kiwi Dollar ended the week up by 1.00% to $0.7188.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Finalized private sector PMI figures for December are due out on Monday and Wednesday.

The numbers are unlikely to have any impact on the Yen, however.

At the end of the week, November household spending will draw interest, however.

The Japanese Yen ended the week up by 0.42% to ¥103.20 against the U.S Dollar.

Out of China

It’s a quiet week ahead on the economic data front.

December private sector PMI numbers are due out on Monday and Wednesday.

While service sector numbers will influence, Monday’s Manufacturing PMI will garner the greatest interest.

The Chinese Yuan ended the week up by 0.22% to CNY6.5272 against the U.S Dollar.

Geo-Politics

U.S Politics

U.S politics will likely remain front and center in a relatively busy week ahead on the economic data front.

The Senate race will draw plenty of interest, with the Georgia runoff on 5th January. A Democrat victory would give the Democrats control of both houses of Congress. While the markets would expect more pandemic aid support, other Biden policies could be a concern.

There’s also Trump lingering in the background…

Brexit

It is Britain’s first week outside of the EU. There’s likely to be plenty of news hitting the wires. Some EU member states are likely to attempt to cause as much disruption as possible.

Border controls and trade will be the main area of focus. Any disruption could test support for the Pound.

One other area of interest will be whether some EU states look to forge bilateral ties with Britain.

The Weekly Wrap – Britain Leaves the EU, amidst Optimism towards 2021

The Stats

It was a particularly quiet week on the economic calendar, in the week ending 1st January.

A total of 15 stats were monitored, following 32 stats from the week prior.

Of the 15 stats, 7 came in ahead of forecasts, with 8 economic indicators coming up short of forecasts. There were no stats that were in line with forecasts in the week.

Looking at the numbers, 7 of the stats reflected an upward trend from previous figures. Of the remaining 8 stats, all 8 reflected a deterioration from the previous.

For the Greenback, it was back into the red to mark a 5th weekly loss in 7-weeks. The Dollar Spot Index fell by 0.32% to end the week at 89.937. In the week prior, the Dollar had risen by 0.27% to 90.257.

Out of the U.S

It was a relatively busy week on the economic data front.

Key stats included November goods trade data, Chicago PMI, and weekly jobless claims figures.

In December, the Chicago PMI rose from 58.2 to 59.5, while the goods trade deficit widened from $80.42bn to $84.82bn.

Also positive was a fall in jobless claims figures. In the week ending 25th December, U.S jobless claims fell back from 806k to 787k.

The jobless claims figures supported the U.S equity markets on the final day of the year.

Other stats included housing sector figures that also failed to move the dial.

In the equity markets, the S&P500 and Dow rose by 1.43% and by 1.35% respectively. The NASDAQ saw a more modest 0.65% gain in the week.

Out of the UK

It was a quiet week on the economic data front.

House price figures for December were the only stats from the UK in the week.

In spite of an uptick in house prices, the numbers had a muted impact on the Pound.

Support came from the Brexit deal and the House of Commons and House of Lords vote in favor of the Bill.

In the week, the Pound rose by 0.85% to $1.3672. In the week prior, the Pound had risen by 0.27% to $1.3560

The FTSE100 ended the week down by 0.64%, reversing a 0.27% loss from the previous week.

Out of the Eurozone

It was also a quiet week on the economic data front.

Key stats included job seeker figures from France and prelim December inflation figures from Spain.

Neither had an impact on the EUR, however, with optimism towards a 2021 economic recovery supporting the EUR.

The combination of a Brexit deal and the rollout of vaccines across the bloc were key drivers.

For the week, the EUR rose by 0.18% to $1.2215. In the week prior, the EUR had fallen by 0.52% to $1.2193.

For the European major indexes, it was a bullish week. The CAC40 and EuroStoxx600 rose by 0.53% and by 0.77% respectively, with the DAX30 gaining 0.97%.

For the Loonie

It was a particularly quiet week on the economic data front. There were no key stats from Canada to provide the Loonie with direction.

Optimism towards a 2021 economic recovery supported crude oil prices and the Loonie in the week.

U.S stimulus, monetary policy, and the rollout of the COVID-19 vaccines were positive for market risk appetite.

Private sector PMI numbers from China failed to impact, in spite of a marginal softening in private sector activity.

In the week ending 1st January, the Loonie rose by 1.06% to C$1.2728. In the week prior, the Loonie had fallen by 0.60% to C$1.2865.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar, which reversed losses from the week prior.

In the week ending 1st January, the Aussie Dollar rallied by 1.17% to $0.7694, with the Kiwi Dollar ending the week up by 1.00% to $0.7188.

For the Aussie Dollar

It was a particularly quiet week on the economic calendar.

There were no material stats from Australia to provide the Aussie Dollar with direction in the week.

The lack of stats left the Aussie Dollar in the hands of market risk sentiment.

COVID-19 vaccinations across key economies and expectation of further relief packages in the US drove demand for riskier assets. Commodity prices were also on the rise in the week as a result. The Bloomberg Commodity Index rose by 1.34% in the week.

For the Kiwi Dollar

It was also a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

The lack of stats left the Kiwi in the hands of market risk sentiment.

For the Japanese Yen

It was a relatively quiet week on the economic calendar. Prelim industrial production figures for November were in focus.

Following an impressive 4% rise in October, production stalled in November.

Impact on the Yen was limited, however, as Dollar support waned in the week.

The Japanese Yen rose by 0.22% to ¥103.20 against the U.S Dollar. In the week prior, the Yen had fallen by 0.13% to ¥103.43.

Out of China

Private sector PMIs for December were in focus late in the week.

On Thursday, the NBS Manufacturing PMI fell from 52.1 to 51.9, with the services PMI falling from 56.4 to 55.7. As a result, the Composite PMI fell from 55.7 to 55.1.

The impact on the markets was relatively muted with a number of key markets closed on the day.

In the week ending 1st January, the Chinese Yuan rose by 0.22% to CNY6.5272. In the week prior, the Yuan had fallen by 0.03% to CNY6.5418.

The CSI300 rallied by 3.36%, with the Hang Seng ended the week up by 3.20%.

European Equities: A Month in Review – December 2020

The Majors

It was another bullish month for the European majors in December, with COVID-19 vaccine news Brexit delivering further support.

The DAX30 rallied by 3.22% to lead the way, with the CAC40 and EuroStoxx600 gaining 0.60% and 2.48% respectively.

The gains were not as impressive as those seen in November, however, with lockdowns and a new strain of the virus testing investor sentiment.

After having seen 2 consecutive months in the red, however, a 2nd consecutive monthly gain consolidated November’s rebound.

Adding to support for the majors, was progress towards a U.S stimulus package.

A Brexit deal, a U.S stimulus package, with the promise of more, and COVID-19 vaccines delivered optimism towards next year.

On 30th December, the House of Commons voted 521 for and 73 against the Brexit Agreement ahead of Britain’s departure at 2300 GMT on 31st December. The House of Lords also passed the Bill.

Also on the political front, there was plenty of action in the wake of the U.S Presidential Election. In the end, departing President Trump failed to overturn the outcome, while managing to disrupt politics on Capitol Hill.

The Stats

It was a quieter month on the Eurozone economic calendar.

Key stats included prelim December private sector PMIs for France, Germany, and the Eurozone and consumer and business sentiment figures.

A pickup in manufacturing sector activity in Germany and a return to expansion in France’s manufacturing sector delivered support.

While the services sector continued to contract, the rate of contraction eased in both France and Germany.

As a result, the Eurozone’s Composite rose from 45.3 to 49.8 in December, according to prelim figures. The all-important manufacturing PMI increased from 53.8 to 55.5.

Containment measures across member states continued to weigh on service sector activity at the end of the year.

From Germany, the Ifo Business Climate Index increased from 90.9 to 92.1, with the ZEW Economic Sentiment Indicator rising from 39.0 to 55.0. Positive vaccine news delivered the upside for both in December.

A marginal fall in consumer confidence in Germany had a muted impact. The GfK Consumer Climate Index fell from -6.8 to -7.3. Lockdown measures across Germany weighed on the index for January.

From the U.S

Economic data delivered mixed results. Consumer confidence waned in December, with the CB Consumer Confidence Index falling from 96.1 to 88.6 in December.

Retail sales saw another decline in November, with core retail sales falling by 0.9%, following a 0.1% decline in October.

Prelim private sector PMI numbers for December also disappointed. The manufacturing PMI slipped from 56.7 to 56.5, with the Services PMI falling from 58.4 to 55.3.

While the jobless claims figures delivered mixed results throughout the month, the numbers remain skewed to the negative.

Initial jobless claims had fallen back to a low 712k in the week ending 27th November before jumping to 885k in the week ending 11th December. While easing back to 803k the following week, claims remained elevated amidst the 2nd wave of the pandemic.

Other key stats included core durable goods orders for November, which came up short of forecasts, and November’s nonfarm payrolls, which also disappointed.

In November, nonfarm payrolls rose by 245k, following a 638k increase in October.

From elsewhere, economic data from China continued to impress. Fixed asset investments, industrial production, and retail sales all saw a pickup in November.

On the trade front, the USD trade surplus widened from $58.44bn to $75.42bn, with exports surging by 21.1%.

At the end of the month, private sector PMIs for December reflected a slight easing in private sector activity but no by a significant margin. The NBS Manufacturing PMI fell from 52.1 to 51.9, with the Non-Manufacturing PMI falling from 56.4 to 55.7.

Monetary Policy

The ECB did test support for the majors by downwardly revising growth forecasts for 2021. Additionally, the ECB increased the PEP by €500bn. The downward revision came as EU member states reintroduced containment measures as a result of the 2nd wave of the pandemic.

From the FED, while the FED revised upwards economic forecasts, the promise of holding bond purchases and interest rates at current levels left a dovish tone.

In December, the FED left interest rates unchanged.

The Market Movers

For the DAX: It was a mixed month for the auto sector in December. Volkswagen rallied by 7.63%, with Continental and Daimler rising by 5.94% and by 2.08% respectively. BMW bucked the trend, however, falling by 0.96%.

It was also a mixed month for the banks. Deutsche Bank slid by 4.18%, while Commerzbank ended the month up by 7.14%.

From the CAC, it was another bullish month for the banking sector. Credit Agricole rallied by 6.72%, with BNP Paribas and Soc Gen ending the month with gains of 0.30% and 1.98% respectively.

It was a particularly bullish month for the auto sector. Peugeot jumped by 13.21%, with Renault gaining 7.23%.

Supported by COVID-19 vaccine news, Air France-KLM consolidated November’s 77.94% rebound with a 2.40% gain. Airbus SE followed November’s 40.17% surge with a 2.34% rise in December.

On the VIX Index

It was back into the green for the VIX in December to mark a 4th monthly gain in 5-months. Partially reversing a 45.9% slump from November, the VIX rose by 10.60% to end the month at 22.75.

COVID-19 vaccines and U.S politics, coupled with assured support from the FED delivered support for riskier assets in the month.

A continued rise in new COVID-19 cases supported the upside in the VIX.

In November, NASDAQ rallied by 5.65%, with the Dow and S&P500 ending the month up by 3.27% and by 3.71% respectively.

VIX 010121 Monthly Chart

The Month Ahead

We can expect another busy month ahead on the Eurozone economic calendar. Having taken a backseat of late, economic data will begin to have a greater impact on the markets once more.

Key through the month will be January private sector PMIs, retail sales, unemployment, and business and consumer confidence.

The markets will be looking for a continued recovery across the private sector and a pickup in consumer spending.

Both business and consumer confidence will need to improve to deliver support.

From the U.S, nonfarm payrolls, service sector activity, and consumer confidence will be key areas of focus.

Out of China, trade data and private sector PMIs will also provide direction.

On the monetary policy front, the promise of continued support will also influence.

Away from the economic calendar, expect COVID-19 news and vaccination updates and chatter from Capitol Hill to also provide direction. The markets are expecting the Democrats to deliver more stimulus. There is also the Senate race to factor in.

European Equities: A Week in Review – 31/12/20

The Majors

It was a bullish final week of the year for the European majors. The CAC40 and the EuroStoxx600 rose by 0.53% and by 0.77% respectively, with the DAX30 gaining 0.97%.

A pullback on Thursday left the CAC40 and EuroStoxx600 with modest gains, while the German markets were closed on Thursday.

In a shortened week for the majors, COVID-19 vaccinations and the Brexit deal delivered support to the majors in the week.

With EU-wide vaccinations in progress and a no-Brexit withdrawal from the EU averted, optimism towards 2021 supported riskier assets.

U.S stimulus and expectation of more stimulus in the New Year added to the optimism towards the economic outlook for next year.

The upside was limited, however, with a continued rise in new COVID-19 cases and the new and more virulent strain of the virus a concern.

The Stats

It was a quiet week on the economic calendar. Key stats included French job seeker totals and prelim December inflation figures from Spain.

In France, job seekers rose from 3,549.7k to 3,586.3k in November. The markets were forgiving, however, with lockdown measures in November contributing to the uptick.

From Spain, deflationary pressures eased at the end of the year. Consumer prices fell by 0.5%, year-on-year, following a 0.8% decline in November. The Harmonized Index for Consumer prices fell by 0.6%, following a 0.8% decline in November

The stats ultimately had a muted impact on the majors, however.

From the U.S

Economic data was on the busier side. Key stats included November goods trade data and pending home sales and December’s Chicago PMI.

The stats were mixed, with the goods trade deficit widening and pending home sales sliding in November.

On the positive, however, was a pickup in the Chicago PMI from 58.2 to 59.5 in December.

On Thursday, the weekly jobless claims figures were out after the shortened European session.

The Market Movers

From the DAX, it was a bearish week for the auto sector. BMW slid by 1.62% to lead the way down, with Continental and Daimler falling by 0.53% and by 0.82% respectively. Volkswagen slipped by just 0.01% in the week.

It was also a bearish week for the banking sector. Commerzbank slid by 1.68%, with Deutsche Bank falling by 0.11%.

From the CAC, it was a bearish week for the banks. Credit Agricole slid by 1.90%, with BNP Paribas and Soc Gen falling by 1.58% and by 1.45% respectively.

It was also a bearish week for the French auto sector, however. Peugeot and Renault ended the week with losses of 1.63% and 2.30% respectively.

Air France-KLM rallied by 5.28%, following a 3.69% gain from the previous week, while Airbus ended the week down by 2.46%.

On the VIX Index

It was just a second weekly gain from 6-weeks for the VIX. In the week ending 31st December, the VIX rose by 5.67%. Reversing a 0.19% decline from the previous week, the VIX ended the week at 22.75.

For the week, Dow and S&P500 rose by 1.35% and by 1.43% respectively, with the NASDAQ gaining 0.65%.

VIX 010121 Weekly Chart

The Week Ahead

It’s a particularly busy week ahead on the economic calendar.

Key stats include private sector PMI numbers for December and German unemployment, retail sales, trade, and industrial production figures.

French consumer spending figures will also draw attention in the week.

Other stats include member state inflation and Eurozone retail sales and unemployment figures that should have a muted impact.

From the U.S, the market’s preferred ISM private sector PMIs, the weekly jobless claims, and nonfarm payrolls will influence.

Out of China, the Caixin Manufacturing PMI ahead of the European open on Monday will set the tone.

Away from the economic calendar, COVID-19 news and chatter from Capitol Hill will remain in focus.

European Equities: China Private Sector PMIs and Capitol Hill to Influence

The Majors

It was a bearish day for the European majors on Wednesday, with the EuroStoxx600 falling by 0.34% to lead the way down. The CAC40 and DAX30 weren’t far behind, with losses of 0.22% and 0.31% respectively.

With the year coming to an end for the DAX30, investors locked in profits going into the holidays.

The downside came in spite of AstraZeneca’s vaccine approval and positive sentiment towards Brexit and the economic outlook.

Pinning the majors back on the day was the continued upward trend in new COVID-19 cases and concerns over the new strain.

The Stats

It was a quiet day on the economic calendar. Prelim December inflation figures for Spain were in focus in the early part of the day.

Deflationary pressures eased in December. The Harmonized Index of Consumer Prices fell by 0.6%, year-on-year, in December, following a 0.8% decline in November. Economists had forecast a 0.7% decline.

Consumer prices fell by 0.5%, year-on-year, following a 0.8% decline in November.

From the U.S

It was a busier day on the economic data front. Goods trade data, pending home sales, and Chicago PMI figures were in focus late in the session.

In November, the goods trade deficit widened from $80.42bn to $84.82bn, with pending home sales sliding by 2.6%. In October, pending home sales had fallen by 0.9%.

On the positive, however, was a rise in Chicago’s PMI from 58.2 to 59.5. Economists had forecast a decline to 57.0.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. Volkswagen rose by 0.57% to buck the trend on the day. BMW fell by 0.81% to lead the way down, however, with Continental and Daimler seeing losses of 0.33% and 0.28% respectively.

It was also a mixed day for the banks. Deutsche Bank rose by 0.24%, while Commerzbank fell by 0.27% on the day.

From the CAC, it was a bearish day for the banks. Credit Agricole fell by 0.86%, with BNP Paribas and Soc Gen ending the day down by 0.78% and by 0.57% respectively.

It was also a bearish day for the French auto sector. Peugeot and Renault fell by 0.22% and by 0.86% respectively.

Air France-KLM fell by 1.68%, with Airbus SE ending the day with a 1.96% loss.

On the VIX Index

It was back into the red for the VIX on Wednesday, following 2 consecutive days in the green. The VIX fell by 1.34% on the day, partially reversing a 6.36% gain from Tuesday, to end the day at 22.77.

The Dow and the NASDAQ rose by 0.24% and by 0.15% respectively, with the S&P500 gaining 0.13% gain.

Positive sentiment towards an economic recovery delivered support for the majors as the year nears its end.

FED support, government stimulus, and COVID-19 vaccinations continued to drive market optimism for 2021. The upside on the day came in spite of rising COVID-19 cases and the new and more virulent strain of the virus.

VIX 311220 Daily Chart

The Day Ahead

It’s a quiet day ahead on the economic calendar, with German and Italian markets closed for the holidays.

The French markets are open but scheduled for an easy close.

While there are no stats due out of the Eurozone, expect the CAC40 to respond to private sector PMI numbers from China.

China’s NBS Manufacturing and Non-Manufacturing PMI numbers for December are due out ahead of the open.

From the U.S, initial jobless claims figures are due out after the close.

Away from the economic calendar, COVID-19 and any chatter from Capitol Hill will also provide direction.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 15 points.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: U.S Stats, Capitol Hill, and the Brexit Vote in Focus

Economic Calendar:

Wednesday, 30th December

Spanish HICP (YoY) (Dec)  

The Majors

It was a mixed day for the European majors on Tuesday. The DAX30 slipped by 0.21%, while the CAC40 and EuroStoxx600 saw gains of 0.42% and 0.76% respectively.

There were no major stats from the Eurozone or the U.S to provide the majors with direction on the day.

Brexit continued to deliver support ahead of today’s UK Parliamentary vote. Expectations of more U.S stimulus and COVID-19 vaccine news also supported the European majors on the day.

The Stats

It was a particularly quiet day on the economic calendar. There were no material stats from the Eurozone to provide the majors with direction.

From the U.S

It was a quiet day on the economic data front. House price figures were in focus late in the session, which had a muted impact on the European majors.

In October, the S&P/CS HPI Composite – 20 n.s.a rose by 7.9%, year-on-year, following a 6.6% increase in September. Economists had forecast a 6.9% rise.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. Daimler and Volkswagen fell by 1.11% and by 0.98% respectively to lead the way down. BMW and Continental saw more modest losses of 0.23% and 0.73% respectively.

It was also a bearish day for the banks. Deutsche Bank slid by 2.43%, with Commerzbank falling by 1.49%

From the CAC, it was a mixed day for the banks. BNP Paribas and Credit Agricole rose by 0.03% and by 0.05% respectively. Soc Gen bucked the trend, falling by 0.54%.

It was also a mixed day for the French auto sector. Peugeot fell by 0.84%, while Renault ended the day up by 0.40%.

Air France-KLM rallied by 4.63%, with Airbus SE rising by 1.19%.

On the VIX Index

There was a 2nd consecutive day in the green for the VIX on Tuesday. Following a 0.79% gain on Monday, the VIX rose by 6.36% to end the day at 23.08.

The Dow and S&P500 both fell by 0.22%, with the NASDAQ ending the day down by 0.38%.

Through the U.S session, uncertainty over stimulus weighed on the majors that had hit fresh highs on the day. News of members of the senate planning to block the increase in payments from $600 to $2,000 weighed.

A continued surge in new COVID-19 cases amidst the ongoing vaccinations and the existence of the UK strain of the virus in the U.S were also negatives on the day.

VIX 301220 Daily Chart

The Day Ahead

It’s a quiet day ahead on the economic calendar. Prelim December inflation figures from Spain are due out early in the European session.

The stats are unlikely to have an impact on the European majors, however.

From the U.S, it’s a busier day on the economic calendar. Key stats include November trade and home sales figures, along with December’s PMI for Chicago.

Barring particularly dire trade figures, expect Chicago’s PMI to garner the greatest interest.

Away from the economic calendar, the Brexit vote in the House of Commons, COVID-19, and chatter from Capitol Hill will also influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 3 points, while the DAX was down by 76 points

For a look at all of today’s economic events, check out our economic calendar.

Great Occasions on The JPY

The Santa rally is here; indices are skyrocketing with the DAX finally hitting all time highs. Pretty remarkable if you ask me but in today’s analysis I will focus on the Japanese Yen, which is part of three very interesting setups.

Let’s start  what I believe is the best pair, the EURJPY. Here, we definitely have a positive sentiment, which originally started with the inverse head and shoulders pattern in Q4. After the price broke the neckline, we got a very nice upswing followed by a flat correction shaped like a rectangle. Yesterday, the price broke the upper line of the resistance and today, for the first time since August, it’s trading above the major horizontal resistance of 126.7. Once the price closes above this resistance, we’ll get a proper buy signal.

Now the AUDJPY, where the price is preparing for a major buy signal. First of all, the AUDJPY broke the crucial long-term down trendline, connecting lower highs since 2014. Furthermore, the price created an inverse head and shoulders pattern and the price is currently trying to break the neckline. A breakout from that resistance level would trigger a proper long-term buy signal.

Finally the USDJPY, a combination of two weak currencies, which leads to a sideways. Recently, the price bounced from a combination of dynamic and horizontal resistances. If the price stays below those resistances, there’s no buy signal. We will however see a buy signal if one of two scenarios plays out; either if the price manages to close the day above the two resistance levels, or a if there’s a breakout of the mid-term dynamic support connecting higher lows since mid December. As for now, we’ll wait, the signal will most likely come soon.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: Futures Point Northwards with no Stats to Spook the Markets

Economic Calendar:

Wednesday, 30th December

Spanish HICP (YoY) (Dec)  

The Majors

It was a bullish start to the week for the European majors following Friday’s market closures across Europe.

The DAX30 rallied by 1.49%, with the CAC40 and the EuroStoxx600 gaining 1.20% and 0.66% respectively.

A post-Brexit trade agreement and news of Trump’s signing of the aid package and spending bill delivered support on the day.

2 key risks to riskier assets have now been removed near-term. With a no-deal Brexit averted and the U.S stimulus package delivered, EU wide vaccinations also raise the prospects of an eventual end to the COVID-19 pandemic.

COVID-19 figures will continue to draw attention near-term, however. A continued rise in new cases is likely until sufficient vaccine doses are available. this could mean further containment measures near-term.

The Stats

It was a quiet day on the economic calendar. French jobseeker figures were in focus in the early part of the European session.

In November, jobseekers rose from 3,549.7k to 3,586.3k.

From the U.S

It was also a particularly quiet day with no material stats to influence the majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Monday. Continental rose by 0.66% to lead the way, with Daimler and Volkswagen seeing gains of 0.58% and 0.41% respectively. BMW bucked the trend, however, falling by 0.19%.

It was also a mixed day for the banks. Deutsche Bank rallied by 2.49%, while Commerzbank slipped by 0.04% on the day.

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 0.38%, with Credit Agricole and Soc Gen seeing losses of 0.67% and 0.59% respectively.

It was also a bearish day for the French auto sector. Peugeot fell by 0.35%, with Renault sliding by 1.34%

Air France-KLM bucked the trend, rallying by 3.15%, while Airbus SE slipped by 0.07%.

On the VIX Index

A run of 3 consecutive days in the red came to an end for the VIX on Monday, logging just a 2nd day in the green from 9. Partially reversing a 7.64% fall on Thursday, the VIX rose by 0.79% to end the day at 21.70.

For the VIX, the upside came in spite of the U.S majors closing out the day in positive territory. COVID-19 and concerns over the pace of any economic recovery likely supported the VIX on the day.

The NASDAQ and S&P500 rose by 0.74% and by 0.87% respectively, with the Dow gaining a more modest 0.68%.

On the day, news of Trump signing of the pandemic aid and spending bill on Sunday delivered support to the majors.

While the majors found stimulus support, continued concerns over the COVID-19 pandemic limited the upside.

In the U.S, the total number of COVID-19 cases stood at 19,642,782 at the time of writing. This is expected to spike over the holiday period. With high-priority groups currently receiving the vaccine, the risk of further containment measures therefore remains.

VIX 291220 Daily Chart

The Day Ahead

It’s a particularly quiet day ahead on the economic calendar. There are no material stats to provide the European majors with direction.

From the U.S, economic data is limited to house price figures that will likely have a muted impact on the majors.

The lack of stats will leave the major in the hands of COVID-19 news updates and chatter from Capitol Hill. Barring any major spikes on the day, further upside could be on the cards, however.

Overnight, lawmakers voted in favor of $2,000 pandemic relief checks, leaving it to the Senate to decide its fate.

A conclusion to the Brexit saga and expectations of yet more stimulus to drive the U.S economic recovery remain positives. Progress towards vaccinating high priority groups across the EU and the U.S is also market positive.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 99 points, with the DAX up by 26 points.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: Brexit, COVID-19 Vaccine news, and U.S Stimulus in Focus

Economic Calendar:

Monday, 28th December

France Jobseekers Total

Wednesday, 30th December

Spanish HICP (YoY) (Dec)  

The Majors

It a quiet end to the week on Thursday, with the CAC40 falling by 0.10%, while the EuroStoxx600 rose by 0.12%.

News of a Brexit trade deal within reach provided the majors with support ahead of the holidays. Concerns over the continued rise in new COVID-19 cases and the new strain continued to weigh on risk appetite, however.

Also adding pressure on the majors was some uncertainty over the COVID-19 stimulus package in the U.S.

Stock markets in Germany and Italy were closed for the holidays.

The Stats

It was a particularly quiet day on the economic calendar. There were no material stats to provide the majors with direction.

From the U.S

It was also a particularly quiet day with no material stats to influence at the end of a shortened European session.

The Market Movers

For the DAX: The market was closed in Germany on Thursday.

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.09%, while Credit Agricole and Soc Gen rose by 0.57% and by 0.08% respectively.

It was also a mixed day for the French auto sector. Peugeot rose by 1.20%, while Renault slipped by 0.22%

Air France-KLM fell by 1.36%, while Airbus SE eked out a 0.10% gain.

On the VIX Index

There was a 3rd consecutive day in the red for the VIX on Thursday, logging a 7th day in the red from 8. Following on from a 3.80% fall on Wednesday, the VIX fell by 7.64% to end the day at 21.53.

The Dow and S&P500 rose by 0.23% and by 0.35% respectively, with the NASDAQ gaining 0.26%. News of a Brexit trade deal supported riskier assets on the day.

Uncertainty over the path of the COVID-19 stimulus package pegged the majors back in a shortened session, however.

News hit the wires on Thursday of lawmakers on Capitol Hill blocking Trump’s demand for changes.

Ultimately, however, hopes of an economic recovery, supported by expectations of nationwide vaccinations in the year to come and monetary and fiscal stimulus continued to provide support.

VIX 281220 Daily Chart

The Day Ahead

It’s another quiet day ahead on the economic calendar. French jobseeker figures are due out that will likely have a muted impact on the majors.

There are no major stats from the U.S to provide direction later in the day.

The lack of stats will leave the major in the hands of Brexit and stimulus news from Capitol Hill. COVID-19 vaccine news will also garner attention on the day.

The Futures

In the futures markets, at the time of writing, the DAX was up by 68 points, with the Dow Mini was up by 63 points.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – Brexit, Capitol Hill, and COVID-19 Remain in Focus

On the Macro

It’s a particularly quiet and shortened week ahead on the economic calendar, with 15 stats in focus in the week ending 1st January. In the week prior, 32 stats had been in focus.

For the Dollar:

It’s a relatively busy week ahead on the economic data front, with U.S stats making up for most of the stats due out.

On Tuesday, Chicago PMI numbers are due out on Wednesday.

Of greatest significance, however, are the all-important initial jobless claims figures that are due out on Thursday.

Other stats including housing sector and trade data that will likely have a muted impact on the Dollar.

It’s a shortened week, with the U.S markets closed on Friday.

The Dollar Spot Index ended the week up by 0.23% to 90.223.

For the EUR:

It’s a particularly quiet week ahead on the economic data front, with most European markets closed on Thursday and Friday. French jobseeker totals on Monday and prelim inflation figures for Spain on Wednesday are the only stats to consider.

We don’t expect the numbers to have a material impact on the EUR, however.

Economic data from China and Brexit and COVID-19 news will remain the key drivers in the week.

The EUR ended the week down by 0.52% to $1.2193.

For the Pound:

It’s a particularly quiet week ahead on the economic calendar. It’s another shortened week, with the UK markets closed on Monday and Friday and set for an early close on Thursday.

Key stats are limited to December house price figures that will likely have a muted impact on the Pound.

The main area of focus in the week will remain Brexit and updates on COVID-19. For the Pound, the House of Commons vote on 30th December will be the main event.

The Pound ended the week up by 0.27% to $1.3560.

For the Loonie:

It’s also a particularly quiet week ahead on the economic calendar, with no material stats to provide direction.

The lack of stats will leave the Loonie in the hands of COVID-19 news updates in the week.

It’s a shortened week, with the Canadian markets closed on Monday and on Friday.

The Loonie ended the week down by 0.60% to C$1.2865 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

There are no material stats due out to provide the Aussie Dollar with direction.

From China, private sector PMI numbers for December will draw interest on Thursday and Friday, however. With the Australian markets closed on Friday and scheduled for an early close on Thursday, we could see a bigger response than normal. The Australian markets are also closed on Monday.

Away from the economic calendar, expect COVID-19 news to also influence.

The Aussie Dollar ended the week down by 0.22% to $0.7605.

For the Kiwi Dollar:

It’s a particularly quiet week ahead on the economic calendar. There are no material stats due out to provide the Kiwi Dollar with direction.

From China, private sector PMI numbers for December will draw interest on Thursday and Friday, however.

It’s a shortened week, with New Zealand also on holiday on Monday and Friday and set for an early close on Thursday.

The Kiwi Dollar ended the week down by 0.27% to $0.7117.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Prelim industrial production figures for November are due on Monday.

With a number of major markets closed, we can expect some sensitivity to the numbers, with volumes on the lighter side.

Away from the economic calendar, COVID-19 news will continue to influence.

The Japanese Yen ended the week down by 0.13% to ¥103.43 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead on the economic data front.

December private sector PMI numbers are due out on Thursday and Friday.

The markets preferred Caixin Manufacturing PMI is due out on Friday, however, when most major markets are closed for New Year’s Day.

The Chinese Yuan ended the week down by 0.03% to CNY6.5418 against the U.S Dollar.

Geo-Politics

U.S Politics

With the U.S on holiday, there shouldn’t be too much to rock the boat in a shortened week ahead.

How the stimulus package proceeds on Capitol Hill will draw interest, however. Following Trump’s refusal to sign the bill, lawmakers refused to accept Trump’s demands last week. The markets are expecting a major package once Biden enters the White House. An interim package is going to be needed, however, to avoid risk aversion and a pickup in demand for the Greenback.

While the package is the main area of focus, President Trump continues to raise eyebrows. He seems unwilling to leave quietly…

Brexit

Boris Johnson delivered what other Prime Ministers failed to deliver last week. In the week ahead, the details of the deal and, more importantly, the parliamentary vote will be the main event.

Reports over the weekend suggest that the Brexit agreement should sail through the House of Commons. With the transition period ending in less than 1-week, there’s no time to make any changes…

The Weekly Wrap – Brexit, COVID-19, and Capitol Hill Provided Direction

The Stats

It was a particularly quiet week on the economic calendar, in the week ending 25th December.

A total of 32 stats were monitored, following 92 stats from the week prior.

Of the 32 stats, 12 came in ahead of forecasts, with 19 economic indicators came up short of forecasts. 1 stat was in line with forecasts in the week.

Looking at the numbers, 10 of the stats reflected an upward trend from previous figures. Of the remaining 22 stats, 20 reflected a deterioration from the previous.

For the Greenback, it was back into the green to mark just a 2nd weekly gain in 6-weeks. The Dollar Spot Index rose by 0.23% to end the week at 90.223. In the week prior, the Dollar had fallen by 1.16% to 89.924.

Out of the U.S

It was a relatively busy week on the economic data front.

Key stats included November personal spending figures, December consumer confidence, core durable goods orders, and weekly jobless claims figures.

Consumer confidence fell from 96.1 to 88.6. Concerns over the sharp increase in new COVID-19 cases weighed on consumer’s assessment of current conditions.

In the week ending 18th December, initial jobless claims stood at 805k, falling back from an upwardly revised 892k from the previous week.

Durable goods orders were also positive, with orders rising by 0.9% in November, following a 1.8% increase in October. Core durable goods fell short of forecasts, rising by 0.4%. In October, core durable goods orders had increased by 1.9%.

On the negative, however, was a fall in personal spending. Personal spending fell by 0.4%, reversing a 0.3% rise in October. Economists had forecast a 0.2% decline.

Other stats included inflation, housing sector, and finalized 3rd quarter GDP and consumer sentiment numbers. These stats had a muted impact on the Dollar and the markets, however.

In the equity markets, the S&P500 fell by 0.17%, while the Dow and the NASDAQ ending the week with gains of 0.07% and 0.38% respectively.

Out of the UK

It was a relatively busy week on the economic data front.

Finalized 3rd quarter GDP and business investment figures were in focus on Tuesday.

An upward revision to 3rd quarter GDP figures provided  early temporary relief for the Pound.

The economy expanded by 16%, reversing most of a 19.8% contraction from the 2nd quarter.

Business investment was also revised up from a prelim 8.8%. A 9.4% rise in the 3rd quarter was not enough to reverse a 26.5% slump from the 2nd quarter, however.

While the stats influenced in the early part of the week, Brexit and COVID-19 news remained the key drivers.

A new coronavirus strain led to the reintroduction of lockdown measures, amidst Brexit uncertainty, which weighed on the Pound early in the week.

A Brexit deal late in the week, however, supported a return to $1.35 levels to end the week in the green. The Pound had fallen to $1.33 levels before the recovery.

In the week, the Pound rose by 0.27% to $1.3560. In the week prior, the Pound had rallied by 2.27% to $1.3524.

The FTSE100 ended the week down by 0.41%, following a 0.27% loss from the previous week.

Out of the Eurozone

It was a quiet week on the economic data front.

Key stats included Flash Eurozone Consumer Confidence and German GfK Consumer Climate figures.

For the Eurozone, the Flash Consumer Confidence Indicator rose from -17.6 to -13.9. In spite of the uptick, the indicator remained well below its long-run average of -11.2, however.

From Germany, the GfK Consumer Climate Indicator fell from -6.7 to -7.3 in January. Economists had forecasted a larger decline to -8.8. A fall in income expectations weighed on the headline figure, with the latest spike in new COVID-19 cases and lockdown measures raising uncertainty.

On Wednesday, finalized 3rd quarter GDP figures from Spain had a muted impact on the majors.

Spain’s economy expanded by 16.4% in the 3rd quarter, according to finalized figures, revised down from a prelim 16.7%. In the 2nd quarter, the economy had contracted by 17.9%, quarter-on-quarter.

For the week, the EUR fell by 0.52% to $1.2193. In the week prior, the EUR had risen by 1.20% to $1.2257.

For the European major indexes, it was a mixed week. The CAC40 and DAX30 fell by 0.32% and by 0.10% respectively, while the EuroStoxx600 rose by 0.02%.

For the Loonie

It was a quieter week on the economic data front. Key stats included October GDP figures.

The economy expanded by 0.4% in October, following a 0.8% expansion in September. Economists had forecast 0.3% growth.

In spite of the better than expected numbers, softer growth pinned the Loonie back. Concerns over the continued rise in new COVID-19 cases and new strains added further pressure, with crude oil prices hitting reverse in the week.

In the week ending 11th December, the Loonie fell by 0.60% to C$1.2865. In the week prior, the Loonie had fallen by 0.15% to C$1.2788.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 25th December, the Aussie Dollar fell by 0.22% to $0.7605, with the Kiwi Dollar ending the week down by 0.27% to $0.7117.

For the Aussie Dollar

It was a quiet week on the economic calendar.

Key stats included Australia retail sales and private sector credit figures for November.

Retail sales jumped by 7% in November, according to prelim figures, coming in well ahead of a forecasted 0.6% decline. In October, retail sales had risen by 1.4%.

Private sector credit also saw a pickup in November, rising by 0.1%. Credit was down by 1.7% year-on-year.

The impact of the stats on the Aussie was relatively muted, however, as the markets grappled with news of the new coronavirus strains.

For the Kiwi Dollar

It was a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

The lack of stats left the Kiwi in the hands of COVID-19 news through the week, leading to the pullback.

For the Japanese Yen

It was a relatively busy week on the economic calendar. There were no economic data out until Friday, however. The stats had a muted impact on the Yen.

In November, retail sales rose by 0.7%, following an 11.90% jump in October, Economists had forecast a 1.7% rise.

The Japanese Yen fell by 0.13% to ¥103.43 against the U.S Dollar. In the week prior, the Yen had risen by 0.71% to ¥103.30.

Out of China

The PBoC was in action at the start of the week. In line with market expectations, however, the PBoC left loan prime rates unchanged.

A lack of stats and status quo on the monetary policy front left the Yuan in limbo for the week.

In the week ending 25th December, the Chinese Yuan fell by 0.03% to CNY6.5418. In the week prior, the Yuan had fallen by 0.10% to CNY6.5400.

The CSI300 rose by 0.84%, while the Hang Seng ended the week down by 0.42%.

European Equities: A Week in Review – 25/12/20

The Majors

It was a mixed week for the European majors in the shortened week ending 24th December 2020. German and Italian markets were closed on Thursday and Friday, with France on a shortened session on Thursday.

The DAX30 and CAC40 fell by 0.32% and by 0.10% respectively, while the EuroStoxx600 rose by 0.02%.

A bearish start to the week left the majors in the deep red. News of a new coronavirus strain in the UK and a lack of progress towards a Brexit deal weighed.

EU member states and beyond banned UK travel in response to the news of the new strain in a bid to avoid exposure to the more virulent strain.

Sentiment shifted on Tuesday, however, supporting recovery from Monday’s sell-off.

Support kicked in following news of U.S lawmakers agreeing on an $892bn COVID-19 stimulus package, however. Even news of Trump’s unwillingness to sign the stimulus bill failed to sink the majors. Expectations are that a more substantial and meaningful package would provide more material support to the economic recovery.

In spite of the negative news on the COVID-19 front, news of an imminent Brexit deal also delivered support for the majors.

The Stats

It was a quiet week on the economic calendar. Key stats included Flash Eurozone Consumer Confidence and German GfK Consumer Climate figures.

For the Eurozone, the Flash Consumer Confidence Indicator rose from -17.6 to -13.9. In spite of the uptick, the indicator remained well below its long-run average of -11.2, however.

From Germany, the GfK Consumer Climate Indicator fell from -6.7 to -7.3 in January. Economists had forecasted a larger decline to -8.8. A fall in income expectations weighed on the headline figure, with the latest spike in new COVID-19 cases and lockdown measures raising uncertainty.

On Wednesday, finalized 3rd quarter GDP figures from Spain had a muted impact on the majors.

Spain’s economy expanded by 16.4% in the 3rd quarter, according to finalized figures, revised down from a prelim 16.7%. In the 2nd quarter, the economy had contracted by 17.9%, quarter-on-quarter.

From the U.S

Economic data was on the heavier side, with November core durable goods, personal spending, and inflation figures in focus. Weekly jobless claims figures also drew interest ahead of the holidays.

In the week ending 18th December, initial jobless claims stood at 805k, falling back from an upwardly revised 892k from the previous week.

Durable goods orders were also positive, with orders rising by 0.9% in November, following a 1.8% increase in October. Core durable goods fell short of forecasts, however, rising by 0.4%. In October, core durable goods orders had increased by 1.9%.

On the negative, however, was a fall in personal spending. In November, personal spending fell by 0.4%, reversing a 0.3% rise in October. Economists had forecasted a 0.2% decline.

Inflation figures were market neutral in spite of falling short of forecasts. In November, the core PCE Price Index rose by 1.4%, following a 1.4% increase in October. Economists had forecasted a 1.5% increase.

Other stats included finalized 3rd quarter GDP and consumer sentiment figures together with November housing sector data. The stats had a muted impact on the European majors, however.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental bucked the trend, rising by 2.39%. It was a bearish week for the rest of the majors, however. Volkswagen and Daimler fell by 0.33% and by 0.50% respectively, with BMW ending the week down by 0.72%.

It was a mixed week for the banking sector, however. Commerzbank rose by 1.32%, while Deutsche Bank slipped by 0.67%.

From the CAC, it was a bullish week for the banks. Credit Agricole rose by 2.14% to lead the way, with BNP Paribas and Soc Gen seeing more modest gains of 0.53% and 1.35% respectively.

It was another bullish week for the French auto sector, however. Peugeot rose by 2.43%, with Renault gaining 1.22%.

Air France-KLM ended a run of weekly losses, with a 3.69% gain, with Airbus ending the week up by 3.42%.

On the VIX Index

It was a 2nd consecutive week in the red for the VIX. In the week ending 24th December, the VIX slipped by 0.19%. Following on from a 7.46% slide from the previous week, the VIX ended the week at 21.53.

For the week, NASDAQ and Dow rose by 0.38% and by 0.07% respectively, while the S&P500 fell by 0.17%.

VIX 251220 weekily Chart

The Week Ahead

It’s another particularly quiet and shortened week ahead on the economic calendar.

Key stats include French jobseeker totals and December inflation figures from Spain.

The numbers are unlikely to have any influence on the European majors, however.

From the U.S, it’s also a quiet week ahead. The weekly jobless claims figures are due out in the week.

With the European markets closed or set for early closure on Thursday, however, jobless claims figures won’t influence the majors.

Away from the economic calendar, the key drivers will continue to include Brexit and COVID-19 news. Any chatter from Capitol Hill on the COVID-19 stimulus package will also provide direction.

European Equities: Brexit and COVID-19 News to Direct the Boerses that are Open

The Majors

It was another bullish day for the European majors on Wednesday, which continued to claw back losses from Monday. The DAX30 rose by 1.26%, with the CAC40 and EuroStoxx600 seeing gains of 1.11% and 1.08% respectively.

Progress towards a Brexit deal drove demand for the European majors ahead of the holidays.

The upside came in spite of continued worries over the COVID-19 pandemic and new strains of the coronavirus.

Following the French ban on UK travelers and freight at the start of the week, a lifting of the ban also delivered a boost.

The Stats

It was a quiet day on the economic calendar. Finalized 3rd quarter GDP numbers for Spain were in focus in the early part of the day.

Spain’s economy expanded by 16.4% in the 3rd quarter, according to finalized figures, revised down from a prelim 16.7%. In the 2nd quarter, the economy had contracted by 17.9%, quarter-on-quarter.

From the U.S

It was another busy day on the economic calendar. November core durable goods, inflation, and personal spending figures were in focus later in the session. The weekly jobless claims figures also drew plenty of attention after last week’s spike.

In the week ending 18th December, initial jobless claims stood at 805k, falling back from an upwardly revised 892k from the previous week.

Durable goods orders were also positive, with orders rising by 0.9% in November, following a 1.8% increase in October. Core durable goods fell short of forecasts, however, rising by 0.4%. In October, core durable goods orders had increased by 1.9%.

Also negative was weaker than expected inflation figures and a fall in personal spending.

In November, the core PCE Price Index rose by 1.4%, following a 1.4% increase in October. Economists had forecasted a 1.5% increase.

Personal spending fell by 0.4%, reversing a 0.3% rise in October. Economists has forecasted a 0.2% decline.

Finalized consumer sentiment figures for December and new home sales for November were also in focus but had a muted impact on the majors. There was a lack of influence in spite of the numbers being skewed to the negative.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Wednesday. Continental and Daimler led the way with gains of 3.05% and 3.07% respectively. BMW and Volkswagen saw more modest gains of 1.58% and 2.03% respectively.

It was also a bullish day for the banks. Deutsche Bank rose by 2.39%, with Commerzbank rallying by 3.27%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rallied by 3.18% and by 3.05% respectively. Soc Gen led the way, however, with a 4.18% gain.

It was also a bullish day for the French auto sector. Peugeot rose by 0.45%, with Renault gaining 2.47% on the day.

Air France-KLM and Airbus SE rallied by 4.52% and by 4.56% respectively, with Airbus SE the frontrunner on the day.

On the VIX Index

There was more red for the VIX on Wednesday, logging a 6th day in the red from 7. Following on from a 3.70% fall on Tuesday, the VIX fell by 3.80% to end the day at 23.31.

The Dow and S&P500 rose by 0.38% and by 0.07% respectively, while the NASDAQ fell by 0.29%

U.S President Trump was unable to send the majors into the red despite a refusal to sign the pandemic relief bill.

Hopes of a better stimulus package and the promise of more from the President-Elect supported the majors on the day.

Progress towards a Brexit deal also supported the demand for riskier assets.

VIX 241220 Daily Chart

The Day Ahead

It’s another quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide direction, with some EU markets closed.

Germany and Italy’s markets are closed for the day, with France on a half-day.

From the U.S, there are also no material stats, with the U.S markets scheduled for an early close.

For the CAC40, a lack of stats will leave Brexit and COVID-19 to provide direction, along with any chatter from Capitol Hill.

News of Britain and the EU nearing a Brexit agreement should continue to support demand for the European majors.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 61 points.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: Brexit, COVID-19 and U.S Stats to Drive the Majors

Economic Calendar:

Wednesday, 23rd December

Spanish GDP (QoQ) (Q3) Final

The Majors

It was a bullish day for the European majors on Tuesday. The CAC40 rose by 1.36%, with the DAX30 and EuroStoxx600 ending the day with gains of 1.30% and 1.18% respectively.

Support kicked in from news of progress towards a Brexit deal and positive reaction to the U.S stimulus package. On the Brexit front, while there were reports of progress, Uk fisheries remained a hurdle.

The upside came in spite of widening concerns over the continued rise in COVID-19 cases and the identification of the new strain of the coronavirus.

For now, vaccine approvals and the commencement of vaccinations eased some of the market angst over the news of new strains. This dynamic could change, however, should any strains become resilient to the vaccines now available.

On Tuesday, news hit the wires that BioNTech and Monderna Inc. were carrying out tests to establish whether the new UK stain is resilient to their respective vaccines. The outcome of these tests will have a material impact on market risk sentiment.

The Stats

It was a relatively quiet day on the economic calendar. German GfK consumer climate figures for January were in focus in the early part of the European session.

The GfK Consumer Climate Indicator fell from -6.7 to -7.3 in January. Economists had forecasted a larger decline to -8.8.

According to the GfK report,

  • Income expectations declined, while economic expectations and propensity to buy saw marginal increases.
  • Uncertainty stemming from the continued rise in new cases and lockdown measures delivered the mixed results.
  • The economic expectations indicator rose by 4.6 points to 4.4 points, with the propensity to buy indicator rising by 6.1 points to 36.6 points. In spite of the rise, the Propensity to Buy indicator remained 16 points below its rate of last year.
  • Weighing on the headline number was a 1 point fall in the income expectations index to 3.6 points. The decline left the Income Expectations indicator down by 31 points from the same time last year.

From the U.S

It was a busier day on the economic calendar. Finalized 3rd quarter GDP, existing home sales figures for November, and December consumer confidence figures were in focus late in the session.

Consumer confidence was the main area of focus on Tuesday. In December, the CB Consumer Confidence Index fell from 96.1 to 88.6.

  • The Present Situation Index slid from 105.9 to 90.3, while the Expectations Index rose from 84.3 to 87.5.
  • Concerns over the sharp increase in new COVID-19 cases weighed on consumer’s assessment of current conditions.

In the 3rd quarter, the U.S economy rebounded by 33.4%, reversing a 31.4% meltdown from the 2nd quarter. This was up from a prelim 33.1%. Existing home sales fell by 2.5% in November, partially reversing a 4.4% rise from October. The stats had a muted impact on the European majors, however.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental eked out a 0.04% gain to buck the trend on the day. BMW and Volkswagen fell by 0.87% and by 0.65% respectively, with Daimler declining by a more modest 0.25%.

It was a bullish day for the banks, however. Deutsche Bank rose by 0.59%, with Commerzbank rallying by 2.20%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.85% and by 1.99% respectively. Soc Gen led the way, however, with a 2.55% gain.

The French auto sector also found support. Peugeot rallied by 2.71%, with Renault gaining 1.92%.

Air France-KLM jumped by 4.94%, with Airbus SE rising by 1.62%.

On the VIX Index

It was back into the red for the VIX on Tuesday, logging a 5th day in the red from 6. Partially reversing a 16.64% gain from Monday, the VIX fell by 3.7% to end the day at 24.23.

It was another mixed day for the U.S majors. The Dow and SP500 fell by 0.67% and by 0.21% respectively, while the NASDAQ ended the day up by 0.51%.

Market jitters over the new strain of the coronavirus and a continued rise in new COVID-19 cases in the U.S weighed.

The shift in risk sentiment came in spite of the COVID-19 stimulus package. Another round of lockdown measures would water down the impact of the latest stimulus package.

On Tuesday, the total number of COVID-19 cases worldwide inched towards 80 million. The U.S saw the total number of cases surge to 18.56 million on Tuesday, with the total number of deaths rising to 328,353.

VIX 231220 Daily Chart

The Day Ahead

It’s another quiet day ahead on the economic calendar. Key stats from the Eurozone include finalized 3rd quarter GDP numbers for Spain.

We don’t expect the numbers to have a material impact on the majors, however.

Following Tuesday’s market reaction to the U.S stimulus bill, the focus will likely return to Brexit and COVID-19 updates.

From the U.S, it’s a busy day ahead on the economic data front. Key stats include November durable goods orders, inflation, and personal spending figures. The all-important jobless claims figures are also due out.

Expect core durable goods and initial jobless claims figures to have the greatest influence on the day.

Finalized Michigan consumer sentiment and new home sales figures are also due out. We would expect these numbers to have a muted impact on the European majors, however.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 38 points.

For a look at all of today’s economic events, check out our economic calendar.

DAX Gap is Still There but It Should be Closed

DAX shows a gap but the price has been trying to recover. The gap might close today.

If the gap is closed we should see another potential drop. The POC zone sits exactly at the 88.6 and we can also spot historical sellers. It is close to W H3/ D H5 camarilla resistance. Watch for rejection in the POC zone 13650-13700. Targets are 13487 followed by 13256. However a close above 13800 will make the price bullish.

For a look at all of today’s economic events, check out our economic calendar.

Cheers and safe trading,

Nenad

European Equities: Brexit and COVID-19 News Updates to Remain in Focus

The Majors

It was a bearish start to the week for the European majors on Monday. The DAX30 slid by 2.82%, with the CAC40 and EuroStoxx600 falling by 2.43% and by 2.33% respectively.

Market reaction to news of a new coronavirus strain in the UK weighed heavily on the European majors.

As EU member states banned UK travel, fears of a spread of the new strain and a shutdown of borders sent the majors into the deep red.

A lack of progress towards a Brexit deal added to the market angst on the day, with both sides unwilling to compromise.

The Stats

It was a relatively quiet day on the economic calendar. Flash consumer confidence figures for the Eurozone were in focus late in the European session.

According to the December report, the Flash Consumer Confidence Indicator rose from -17.6 to -13.9. In spite of the uptick, the indicator remained well below its long-run average of -11.2, however.

From the U.S

It was a particularly quiet day on the economic calendar, with no material stats from the U.S to provide direction late in the session.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. Daimler slid by 2.95%, with BMW and Volkswagen falling by 1.69% and by 1.96% respectively. Continental saw a more modest 0.84% loss on the day.

It was a particularly bearish day for the banks. Deutsche Bank and Commerzbank slid by 3.55% and by 3.90% respectively.

From the CAC, there were heavy losses for the French banks. Soc Gen slid by 5.19%. BNP Paribas and Credit Agricole ended the day down by 4.25% and by 3.38% respectively.

It was also a bearish day for the French auto sector. Peugeot and Renault fell by 1.89% and by 2.88% respectively.

Air France-KLM slid by a further 4.16%, with Airbus SE declining by 2.76%.

On the VIX Index

A run of 4 consecutive days in the red came to an end for the VIX on Monday. Reversing a 1.64% fall from Friday, the VIX rose by 16.64% to end the day at 25.16.

It was a mixed day for the U.S majors, which had followed their European neighbors into the deep red. Market reaction to news of a new coronavirus strain in the UK hit risk appetite early in the U.S session.

Late in the day, support kicked in as the markets responded to news of lawmakers agreeing to a stimulus package on Capitol Hill.

The Dow rose by 0.12, while the NASDAQ and S&P500 saw modest losses of 0.39% and by 0.10% respectively.

VIX 221220 Daily Chart

The Day Ahead

It’s another quiet day ahead on the economic calendar. Germany’s GFK Consumer Climate figures for January are due out later this morning.

With the markets responding to news of the new strain, the numbers are likely to have a muted impact on the majors.

COVID-19 and Brexit news will continue to be key drivers.

From the U.S, finalized 3rd quarter GDP and existing home sales figures for November are due out later in the session. We expect the numbers to have also a muted impact on the majors, however.

The Futures

In the futures markets, at the time of writing, the DAX was up by 130 points, while the Dow Mini was down by 32 points.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: Brexit and Updates from Capitol Hill to Test Support

Economic Calendar:

Monday, 21st December

Eurozone Consumer Confidence (Dec) Flash

Tuesday, 22nd December

GfK German Consumer Climate (Jan)

The Majors

It was a bearish end to the week for the European majors on Friday. The CAC40 and EuroStoxx600 fell by 0.35% and by 0.39% respectively, with the DAX30 seeing a modest 0.27% loss.

A lack of progress towards a Brexit deal and failure by U.S lawmakers to deliver a stimulus package weighed on risk appetite.

The downside came in spite of positive economic data from Germany on the day, with renewed lockdown measures offsetting the positive numbers.

The Stats

It was a relatively quiet day on the economic calendar. Germany’s IFO Business Climate Index figures were in focus in the early part of the session.

The headline Business Climate Index rose from 90.90 to 92.10 in December. Also positive were an increase in the current assessment sub-index from 90.0 to 91.3 and a rise in the business expectations sub-index from 91.8 to 92.8.

According to the December survey,

  • Companies were more satisfied with their current business situation and less skeptical about the 6-months ahead.
  • While the latest lockdown is hitting certain sectors hard, the overall economy is showing resilience.

By Sector:

  • Manufacturing: The index saw a sharp increase, with the current situation sub-index rising to its highest level since January. Optimism towards the next 6-months also rose sharply. The sector’s Business Climate Index increased from +4.0 to +8.9 in the month. The sub-index has recovered strongly from an April low of -41.9.
  • Services: Companies were also more satisfied with the current situation and less pessimistic about the next 6-months. The COVID-19 pandemic continued to weigh on operators, accommodation services, and creative artists, however. The sector’s Business Climate Index increased from -3.1 to -0.4. In April, the sub-index had fallen to a current year low -32.7.

The trade and construction sectors delivered mixed results, however. While the Business Climate Index for the trade sector rose from -4.0 to +0.3, the index for the construction sector remained unchanged at -0.5. Increased pessimism across the construction sector offset an improved assessment of the current situation.

From the U.S

It was a quiet day on the economic calendar. Key stats included current account figures that had a muted impact on the majors.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental rallied by 2.54%, with BMW and Daimler seeing gains of 0.14% and 0.26% respectively. Volkswagen bucked the trend on the day, however, falling by 1.04%.

It was a bearish day for the banks, however. Deutsche Bank fell by 0.80%, with Commerzbank ending the day with a modest 0.15% loss.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen fell by 1.09% and by 0.99% respectively. Credit Agricole led the way down, however, with a 1.81% loss.

It was yet another mixed day for the French auto sector. Peugeot rose by 0.63%, while Renault fell by 1.15%.

Air France-KLM slid by a further 2.45%, with Airbus SE declining by 1.53%.

On the VIX Index

It was a 4th consecutive day in the red for the VIX on Friday. Following on from a 2.53% fall on Thursday, the VIX fell by 1.64% to end the day at 21.57.

The downside in the VIX came in spite of a pullback in the U.S equity markets on the day.

A lack of progress towards a COVID-19 stimulus package weighed on risk appetite at the end of the week.

The Dow and S&P500 fell by 0.41% and by 0.35% respectively, with the NASDAQ falling by a more modest 0.07% on the day.

VIX 211220 Daily Chart

The Day Ahead

It’s a quiet day ahead on the economic calendar. Flash consumer confidence figures for the Eurozone are due out late in the session.

While the consumer confidence figures will influence, updates on Brexit and news from Capitol Hill will be key drivers on the day.

A lack of progress from the weekend towards a Brexit deal and a stimulus package will likely weigh on the majors going into the open.

The Futures

In the futures markets, at the time of writing, the DAX was down by 166 points, while the Dow Mini was up by 59 points.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – COVID-19 Vaccine News, Brexit, and U.S Stimulus in Focus

On the Macro

It’s a quiet and shortened week ahead on the economic calendar, with 31 stats in focus in the week ending 25th December. In the week prior, 92 stats had been in focus.

For the Dollar:

It’s another busy week ahead on the economic data front, however, with U.S stats making up the lion’s share of the calendar.

On Tuesday, finalized 3rd quarter GDP and November existing home sales figures are due out.

Barring a marked downward revision to GDP numbers, the stats should have a muted impact on the Dollar.

On Wednesday, November inflation, personal spending, and new home sales figures are due out. Expect inflation and personal spending figures to garner the greatest interest.

Finalized consumer sentiment figures for December are also due out, which should have limited influence.

On Thursday, November core durable goods and durable goods orders are due out along with the weekly jobless claims figures.

In a shortened session, expect the core durable goods orders and jobless claims figures to have the greatest impact on market risk sentiment.

Away from the economic calendar, Capitol Hill remains a key area of interest.

The Dollar Spot Index ended the week down by 1.06% to 90.016.

For the EUR:

It’s a particularly quiet week ahead on the economic data front, with most European markets closed on Thursday and Friday. Just France and Spain have a shortened session on Thursday, with Germany and Italy closed on both days.

Flash Eurozone consumer confidence figures will draw interest on Monday. An upward movement is expected, with COVID-19 vaccine news to provide support.

On Tuesday, GfK Consumer Climate figures for January are due out, which will likely provide further EUR support. COVID-19 vaccine news should also support a pickup in consumer sentiment at the turn of the year.

Finalized 3rd quarter GDP numbers from Spain, however, should have a muted impact on the EUR on Wednesday.

Away from the economic calendar, COVID-19 and Brexit news will also influence.

The EUR ended the week up by 1.20% to $1.2257.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

Finalized 3rd quarter GDP numbers are due out on Tuesday, along with current account and finalized business investment figures.

Barring marked revisions from prelim estimates, the markets will likely brush aside the stats in the week.

Away from the economic calendar, updates on Brexit and COVID-19 will influence before the holidays.

The Pound ended the week up by 2.27% to $1.3524.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

On Wednesday, October GDP figures are due out ahead of November building permit numbers on Thursday.

Expect the GDP figures to garner the greatest interest.

It’s a shortened week for the Loonie, with the Canadian market on a shortened day on Thursday and closed on Friday.

Away from the economic calendar, COVID-19 vaccine news and updates from Capitol Hill will also influence.

The Loonie ended the week down by 0.15% to C$1.2788 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quiet week ahead on the economic calendar.

Retail sales figures for November are due out on Tuesday. Expect plenty of influence from the retail sales figures in the early part of the week.

COVID-19 vaccine news updates and sentiment towards the economic outlook will be the key driver in a shortened week.

Late last week, news of a COVID-19 cluster in Sydney weighed on the Aussie Dollar. Expect further updates from the weekend to also influence.

The Aussie Dollar ended the week up by 1.18% to $0.7622.

For the Kiwi Dollar:

It’s a particularly quiet week ahead on the economic calendar.

There are no material stats due out in a shortened week to provide the Kiwi Dollar with direction.

The lack of stats will leave the Kiwi Dollar in the hands of COVID-19 news updates and geopolitics.

It’s also a shortened, with the Kiwi markets on an early close on Thursday and closed on Friday.

The Kiwi Dollar ended the week up by 0.73% to $0.7136.

For the Japanese Yen:

It is a relatively busy week on the economic calendar.

December inflation figures are due out along with November retail sales and employment figures on Friday.

With other major markets closed on the day, lower volumes will likely make the Yen more sensitive to the numbers.

Expect November retail sales figures to have the greatest impact.

Away from the economic calendar, COVID-19 news updates will remain a key driver.

The Japanese Yen ended the week up by 0.71% to ¥103.30 against the U.S Dollar.

Out of China

It’s a quiet week ahead on the economic data front, with no economic data due out to influence risk sentiment.

The PBoC is in action at the start of the week, however, though the markets are expecting Loan Prime Rates to remain unchanged.

The Chinese Yuan ended the week up by 0.10% to CNY6.5400 against the U.S Dollar.

Geo-Politics

U.S Politics

With the holidays rapidly approaching, government funding and the stimulus package remain high on the agenda.

Expect plenty of market sensitivity to political updates from Capitol Hill. There was a lack of progress on Saturday, which could test risk appetite should lawmakers fail to make inroads on Sunday.

Brexit

There are less than 2-weeks remaining for Britain and the EU to come up with an agreement.

While the transition period ends on 31st December, however, talks would likely continue if an agreement isn’t reached. It may be of little consolation for the Pound in the week ahead, however.

Much will depend on the messaging between now and the holidays. Until now, the EU has looked to place a more positive spin on talks. A similar sentiment from the British government should, therefore, be Pound positive.

Going into today, there was nothing positive to suggest a deal before the holidays…

European Equities: A Week in Review – 18/12/20

The Majors

It was a bullish week for the European majors in the week ending 18th December. The DAX30 rallied by 3.94%, with the CAC40 and the EuroStoxx 600 seeing more modest gains of 0.37% and 1.48% respectively.

Progress on Capitol Hill towards a COVID-19 stimulus package and renewed hopes of a Brexit deal drove demand for the majors.

COVID-19 vaccine news also delivered support. News of the EMA bringing forward its review of the BioNTech/Pfizer Inc. vaccine to next week was market positive.

Both France and Germany announced that vaccinations would likely commence before the end of the year.

On the economic data front, impressive manufacturing PMI figures from Germany supported the DAX30 rally.

Economic data from the U.S disappointed. The numbers failed to spook the markets, however. Gloomy labor market numbers fuelled optimism towards a $900bn stimulus package.

The Stats

It was a busy week on the economic calendar.

Key stats included December prelim private sector PMI figures for France, Germany, and the Eurozone.

Germany’s manufacturing PMI hit a 34-month high, rising from 57.8 to 58.6. The services sector continued to contract, however, albeit at a slower pace, with the PMI rising from 46.0 to 47.7.

France’s manufacturing sector also got a boost, with the PMI rising from 49.6 to 51.1. While the manufacturing sector returned to expansion, the services sector also continued to contract. The services PMI jumped from 38.8 to 49.2.

As a result of the pickup in manufacturing sector activity, the Eurozone’s manufacturing PMI rose from 53.8 to 55.5. The services PMI increased from 41.7 to 47.3, leading to a rise in the Composite from 45.3 to 49.8.

At the end of the week, business sentiment figures were also positive. The IFO Business Climate Index rose from 90.9 to 92.1 in December. Improved sentiment towards the next 6-months and economic resilience amidst the latest lockdown measures supported the uptick. The Current Assessment sub-Index rose from 90.0.to 91.3, with the Business Expectations sub-index rising from 91.8 to 92.8.

Other stats in the week included finalized November inflation figures and Eurozone trade, industrial production, and wage growth figures.

These stats had a muted impact on the majors, however.

From the U.S

Economic data disappointed in the week. Retail sales continued to decline in November, with service sector activity expanding at a slower pace in December.

Jobless claims also raised more red flags, with initial jobless claims rising from 862k to 885k in the week ending 11th December.

On the monetary policy front, the FED delivered its last monetary policy decision of the year. The FED held monetary policy unchanged while revising growth forecasts upwards.

In spite of the GDP revisions, the FED assured a continuation of the bond purchasing program until progress is made towards maximum employment and inflation objectives.

From elsewhere

Economic data from China was skewed to the positive, with industrial production, retail sales, and unemployment seeing improved numbers in November.

The Market Movers

From the DAX, it was a bullish week for the auto sector. Volkswagen and Continental rallied by 9.21% and by 8.08% respectively, with BMW and Daimler seeing gains of 5.30% and 7.12% respectively.

It was also a bullish week for the banking sector. Commerzbank and Deutsche Bank ended the week up by 4.13% and by 2.73% respectively.

From the CAC, it was a mixed week for the banks. BNP Paribas and Soc Gen rose by 1.02% and by 2.16% respectively. Credit Agricole ended the week flat.

It was a bullish week for the French auto sector, however. Peugeot rallied by 7.09, with Renault gaining 3.08%.

Air France-KLM followed last week’s 5.94% slide with a 5.02% loss, with Airbus ending the week down by 3.46%.

On the VIX Index

It was back into the red for the VIX. In the week ending 18th December, the VIX fell by 7.46%. Partially reversing a 12.12% gain from the previous week, the VIX ended the week at 21.57.

For the week, NASDAQ rallied by 3.05%, with the Dow and S&P500 rising by 0.44% and by 1.25% respectively.

While progress towards a stimulus package on Capitol Hill had supported the majors in the week, failure to deliver limited the upside. Stocks ended the day in the red on Friday as lawmakers failed to cross the line.

COVID-19 vaccine news and a dovish FED were also positives for the markets. Expectations of more support allowed the markets to brush aside disappointing data and spike in new COVID-19 cases.

VIX 191220 weekly Chart

The Week Ahead

It’s a particularly quiet and shortened week ahead on the economic calendar.

Key stats in the week include Eurozone flash consumer confidence figures and Germany’s GfK consumer climate figures.

With the anticipation of a COVID-19 vaccine rollout, the sentiment is likely to improve that should support the majors.

From the U.S, it’s a busier week ahead. With the European boerses closed or scheduled for an early close, however, key stats are limited to inflation and personal spending figures.

Finalized 3rd quarter GDP numbers, housing sector figures, finalize consumer sentiment data should have a muted impact.

Away from the economic calendar, expect COVID-19 news updates, Brexit, and U.S politics to remain key areas of focus, however.

The Weekly Wrap – COVID-19 Vaccine, Brexit, Stimulus Talks, and Stats Were in Focus

The Stats

It was a particularly busy week on the economic calendar, in the week ending 18th December.

A total of 92 stats were monitored, following 52 stats from the week prior.

Of the 92 stats, 46 came in ahead of forecasts, with 35 economic indicators came up short of forecasts. 11 stats were in line with forecasts in the week.

Looking at the numbers, 48 of the stats reflected an upward trend from previous figures. Of the remaining 44 stats, 39 reflected a deterioration from previous.

For the Greenback, it was back into the red, to mark the 4th week in the red from the last 5-weeks. The Dollar Spot Index slid by 1.16% to end the week at 89.924. In the week prior, the Dollar had risen by 0.31% to 90.980.

Progress towards a COVID-19 stimulus package on Capitol Hill and a dovish FED contributed to the Dollar’s demise.

Upbeat COVID-19 vaccine news also supported riskier assets that weighed on the Dollar.

Out of the U.S

It was a busy week on the economic data front.

At the start of the week, industrial production figures showed slower output in November.

Retail sales figures for November, also disappointed, with core retail sales and retail sales on the slide. Core retail sales fell by 0.9%, with retail sales falling by 1.1%.

Adding to the negative sentiment ahead of the FED were disappointing service sector PMI numbers.

In December, the service sector PMI fell from 58.4 to 55.3, reflecting the effects of the spike in new COVID-19 cases.

On Thursday, weekly jobless claims and Philly FED Manufacturing figures wrapped up a busy week.

Yet another red flag on the labor market front, with initial jobless claims jumping to 885k in the week ending 11th December.

Philly FED manufacturing numbers also disappointed, with the Index falling from 26.3 to 11.1.

On Wednesday, the FED added to the negative sentiment towards the Dollar, delivering a dovish tone.

While holding monetary policy unchanged and revising up growth forecasts, the promise of holding bond purchases and interest rates at current levels weighed.

In the equity markets, the S&P500 rose by 1.25%, with the Dow and the NASDAQ ending the week with gains of 0.44% and 3.05% respectively.

Out of the UK

It was also a busy week on the economic data front.

Employment figures on Tuesday disappointed, with claimant counts and the unemployment rate on the rise.

On Wednesday, the focus shifted to inflation and private sector PMI numbers.

The stats were skewed to the negative once more. Inflationary pressures eased in November, with the services sector contracting in December.

With the stats skewed to the negative, the focus then shifted to the BoE on Thursday.

In line with market expectations, the BoE left monetary policy unchanged, citing economic uncertainties.

At the end of the week, November retail sales figures wrapped things up. While the numbers were positive relative to forecasts, the figures reflected the reintroduction of lockdown measures.

Month-on-month, core retail sales fell by 2.6%, with retail sales tumbling by 3.8%.

While the stats were skewed to the negative, agreement to continue Brexit negotiations drove demand for the Pound.

In the week, the Pound rallied by 2.27% to $1.3524. In the week prior, the Pound had fallen by 1.61% to $1.3224.

The FTSE100 ended the week down by 0.27%, following a 0.05% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Prelim private sector PMI numbers for December were the main area of focus in the week.

Better than expected PMIs from France, Germany, and the Eurozone provided EUR support.

In December, Germany’s manufacturing PMI hit a 34-month high of 58.6. Coupled with a return to expansion in France, the Eurozone’s manufacturing PMI rose from 53.8 to 55.5.

Service sector activity remained a drag, however. In spite of a slower rate of contraction, the Eurozone’s composite came in at 49.8, up from 45.3 in November.

At the end of the week, Germany’s IFO Business Climate Index figures also drew attention.

In December, the Business Climate Index rose from 90.9 to 92.1, with the Business Expectations sub-Index up from 91.8 to 92.8. The Current Assessment sub-Index also got a boost, rising from 90.0 to 91.3.

Economic resilience and less skepticism towards the next 6-months supported the pickup in December. The upside came in spite of certain sectors being impacted by fresh lockdown measures.

With the stats skewed to the positive, hopes of vaccine approvals by the EMA next week added support for the EUR and the European majors.

For the week, the EUR rose by 1.20% to $1.2257. In the week prior, the EUR had fallen by 0.07% to $1.2112.

For the European major indexes, it was a bullish week. The DAX30 led the way, rallying by 3.94%, with the CAC40 and the EuroStoxx600 rising by 0.37% and by 1.48% respectively.

For the Loonie

It was a busier week on the economic data front. Key stats included November inflation and October retail sales figures.

A pickup in inflationary pressures in November delivered support mid-week. The annual rate of core inflation picked up from 1.0% to 1.5%.

At the end of the week, retail sales and core retail sales were skewed to the negative, however. Core retail sales were flat in October, after a 1% rise in September. Retail sales rose by 0.4%, easing from a 1.1% rise in September.

In the week ending 11th December, the Loonie fell by 0.15% to C$1.2788. In the week prior, the Loonie had risen by 0.12% to C$1.2769.

Elsewhere

It was another bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 18th December, the Aussie Dollar rose by 1.18% to $0.7622, with the Kiwi Dollar ending the week up by 0.73% to $0.7136.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats included November employment figures. Another pickup in employment led to a fall in the unemployment rate from 7.0% to 6.8%.

The fall in unemployment came in spite of a rise in the participation rate, another boost for the Aussie Dollar.

On the monetary policy front, the RBA meeting minutes had a relatively muted impact on the Aussie Dollar. There were no major surprises, with the RBA likely to leave cash rates unchanged for at least 3-years.

Progress towards a global COVID-19 vaccine also delivered support for riskier assets.

For the Kiwi Dollar

It was a busier week on the economic calendar.

Key stats included consumer and business confidence, trade, and GDP figures.

The stats were skewed to the positive supporting the Kiwi Dollar’s return to $0.71 levels.

In the 4th quarter, consumer confidence saw a marked increase, with business confidence turning positive in December.

GDP figures also impressed, with the economy expanding by 14% in the 3rd quarter. In the 2nd quarter, the economy had contracted by 11%.

While a widening in the trade surplus was also positive, a slide in imports contributed to the widening. COVID-19 vaccinations and a return to normal at NZ ports should support a rebound in imports, however.

For the Japanese Yen

It was a particularly busy week on the economic calendar.

At the start of the week, Tankan survey figures were in focus and skewed to the positive. Private sector conditions improved in the 4th quarter.

The Large Manufacturers Index rose from -27 to -10, with the Large Non-Manufacturers Index rising from -12 to -5.

Trade data and private sector PMI figures disappointed mid-week, however.

In November, the trade surplus narrowed from ¥871.7bn to ¥366.8bn, with exports sliding by 4.2%.

While the service and manufacturing PMIs saw a slight rise in December, both sectors continued to contract.

Wrapping things up at the end of the week were inflation figures that were also negative. Deflationary pressures picked up in November, with core consumer prices falling by 0.9%. In October, core consumer prices had fallen by 0.7%.

On the monetary policy front, the BoJ left policy unchanged at the end of the week, while extending COVID-19 support measures by an additional 6-months.

The Japanese Yen rose by 0.71% to ¥103.3 against the U.S Dollar. In the week prior, the Yen had risen by 0.12% to ¥104.04.

Out of China

Industrial production, retail sales, and unemployment figures for November were in focus early in the week.

The stats were skewed to the positive, supporting riskier assets.

Year-on-year, industrial production rose by 7.0%, following a 6.9% increase in October. Retail sales increased by 5%, following a 4.3% rise in October, supported by improving employment conditions.

The unemployment rate fell from 5.3% to 5.2% in the month.

In the week ending 18th December, the Chinese Yuan fell by 0.10% to CNY6.5400. In the week prior, the Yuan had fallen by 0.23% to CNY6.5463.

The CSI300 rose by 2.26%, while the Hang Seng ended the week down by 0.03%.