Daily Market Commentary 11th December 2020

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The ECB increased their QE (PPP) by EUR$500 Billion, as expected and extend it 9 months to March 2022. This was in line with expectations and had little impact on markets, which were much more concerned about the UK/EU Trade negotiations. British PM Boris Johnson met with EC President Ursula van der Leyer overnight, with no compromise being reached. Negotiations will continue over the weekend, amidst the EU Summit meeting. Brexit will happen on the 31st of December and it looks as though they will extend the painful politics, which will extend negotiations until the last minute.

The ECB’s actions helped push the EUR up to 1.2125, while the GBP fell back below 1.3300. despite a weaker US Dollar. The trade negotiations will continue to impact both of these currencies, as economics and trade demand a solution. Incompetent politicians are driving this extended train crash and testing the patience of member nations and their citizens. UK GDP data was slightly stronger than expected, as was Industrial and Manufacturing Production, but these are likely to tank with the 4th Quarter lock-downs.

Commodity prices are driving the associated currencies, with the weaker reserve, only accentuating the gains. The AUD surged up to 0.7530, while the NZD also rebounded to 0.7080, beneficiaries of the weaker US Dollar and lack of viral infections. The EU Summit will be of interest to markets, highlighted by the UK trade talks and the EU Budget. The US Congress continue to prevaricate and earn the wrath of the people.

Collinson & Co Contact