Daily Market Commentary 13th November 2020

Surging coronavirus cases across Europe and the US dampened market enthusiasm, despite the prospect of the imminent arrival of a successful vaccine. Infection rates have been spiralling upwards and the authorities reactions will impact the economic recovery. The economic impact is clear, as revealed in the economic data being released in Europe. UK GDP has spiked for the quarter just gone, but remains a contraction in the order of nearly 10%, for the year. Industrial and Manufacturing Production in the UK and Europe are suffering major contractions, which may deteriorate further. The renewed economic lock-downs will undermine this the economic recovery and market sentiment.

The Fed’s Jerome Powell also opined on the economic ‘challenges’ ahead, due to the virus, despite the impending vaccine release. This sends a note of caution to the bulls recently flooding global markets. The Dollar consolidated, with the EUR dipping below 1.1800, while the GBP fell back to 1.3100. The UK/EU post Brexit trade agreement is still in the works and further deadline extensions may be required, before a deal can be reached? Trade exposed commodity currencies lost some of their shine, with the NZD drifting back to 0.6850, while the AUD fell to 0.7230. The hawkish RBNZ statement may be reconsidered, in the light of global economic realities?

The virus remains a clear and present danger to global economies, while the US election is mired in litigation, leading to uncertainty.