By Deepta Bolaky
Global equities are finding support on positive geopolitical headlines and the first round of vaccinations. Brexit is at a key turning point and investors are closely monitoring any statements or discussions to gauge the path towards a deal. In the final weeks leading up to the Brexit deadline, both the EU and the UK appear more committed coming to a compromise on the level playing field, governance and fisheries.
We are also seeing some positive headlines on the US stimulus front driving hopes of a relief package. The Federal Reserve was at the forefront of attention yesterday as, amid a stimulus gridlock, the post-election situation, the second wave of coronavirus outbreak and first immunisations in the US, investors were looking for the kind of support left from the central bank.
As widely expected, the Federal Reserve strengthened its commitment to support the U.S. economy, promising to maintain its massive asset purchase program until it sees “substantial further progress” has been made toward the maximum employment and price stability goals.
Wall Street ended on a mixed note as investors remain cautiously optimistic:
In the FX space, the US dollar swung between gains and losses following the headlines on stimulus and the Fed’s policy statement. Major currency pairs remained around familiar levels.
On the economic front, investors analyse the PMI reports across Germany, Eurozone, the UK and the US:
Germany – German economy shows ongoing resilience in December
Eurozone – Eurozone economy close to stabilising as Flash PMI rises to 49.8
United Kingdom – UK private sector output edges up in December. Rush to beat Brexit deadline boosts manufacturing orders, but port delays hit supply chains.
United States – Recovery momentum wanes amid rising virus cases and supply delays
The EURUSD pair jumped to a high of 1.2212 before retreating lower to trade around the 1.21 level.
Source: GO MT4
The first round of immunizations and the overall optimism in the markets supported the oil market despite the further lockdown restrictions of major economies threatening lower demand and bearish API report. Following the huge build up in crude oil inventories of 15.189M barrels reported by the EIA, we note that the crude oil stocks change was registered at -3.135M in December 11.
Crude oil prices edged higher on Wednesday on the decline in inventory stocks. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading at around $47.88 and $51.12 respectively.
The precious metal also swung between gains and losses throughout the session driven mostly by the Fed’s statement and stimulus talks. The XAUUSD pair firmed higher on stimulus hopes. As of writing, the XAUUSD pair was trading around $1,864.
Source: GO MT4
By Deepta Bolaky
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|Friday, 18 December 2020
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