Forex news from the European trading session - 16 December 2020
Headlines:
- UK PM Johnson: We have agreed to go ahead with planned Christmas relaxation
- Merkel: Brexit trade talks to continue until the end of this week
- US MBA mortgage applications w.e. 11 December +1.1% vs -1.2% prior
- UK December flash services PMI 49.9 vs 50.7 expected
- Brexit: Fisheries the main problem in trade talks now - EU official
- Eurozone December flash services PMI 47.3 vs 42.0 expected
- Germany December flash manufacturing PMI 58.6 vs 56.5 expected
- France December flash services PMI 49.2 vs 40.0 expected
- EU's von der Leyen on Brexit: There is a path to an agreement now
- UK November CPI +0.3% vs +0.6% y/y expected
- Tokyo reports record 678 new coronavirus cases in latest update today
- Pelosi: We'll be back early tomorrow to get the job done
- Germany reports 27,728 new coronavirus cases in latest update today
Markets:
- GBP leads, CAD lags on the day
- European equities higher; E-minis up 0.3%
- US 10-year yields up 1.5 bps to 0.923%
- Gold up 0.3% to $1,858.43
- WTI flat at $47.64
- Bitcoin up 2.3% to $19,870
The risk train marches on ahead of the Fed meeting later today, this time buoyed by more positive French and German PMI prints for December.
Both showed a modest improvement from November and despite tighter restrictions, the manufacturing sector in particular held up rather well to beat estimates handily.
European equities were slightly higher at the open but got a shot in the arm thereafter and has maintained most of its advance ahead of North American trading now.
As such, the dollar kept weaker throughout with EUR/USD rising from 1.2170 to 1.2212 before pulling back a little to just under the figure level currently.
AUD/USD also jumped to test short-term resistance around 0.7572-78 and is hovering thereabouts now with USD/JPY easing from 103.50 to near the support region from the November lows close to 103.18-19.
The pound continues to keep with the optimism that there will be a positive Brexit outcome, as talks continue to stretch on until the weekend again. GBP/USD pushed higher on dollar weakness from 1.3460 to 1.3549 and is holding at the highs still.
The loonie is the biggest loser following some jawboning by BOC governor Macklem yesterday here, in which he said it is "on our radar screen".
Looking ahead, the Fed is the key risk event to watch out for in the day ahead. You can check out Adam's comprehensive preview on that here if you haven't already.
