Markets were flat, to open the new week, after positive signs early in the trading day. The EU and UK decided to once again extend the deadline for post-Brexit trade talks, another week, which saw the GBP bounce back to 1.3350. The extended negotiations and torturous failures only accentuate the brinkmanship and highlight the ineptitude of the political classes. The EU is now a massive unelected bureaucracy and the UK will be fortunate indeed, to be away from their socialist clutches. The EUR traded up to 1.2150, with stronger than expected Industrial Production data, but must be prepared for what is to come down the turnpike, with the fall-out from the lockdowns.
Markets are in a state of flux as Germany, London and New York all prepare for further strict lock-downs. These economic closures are devastating and markets are saved only by the prospect of the vaccine roll-out. The distribution has now begun in the USA, following FDA approval, at the end of last week. The US Congress looks to be progressing a bail-out package, after the $908 Billion proposed bill was split into two. The bail-out support bill of $750 Billion looks likely to pass as both parties agree, while the smaller $150 Billion bill (bailout States and Indemnity for business) is a possibility. It begs the question as to why this was not done before the election and the answer is simply, politics.
The NZ Services PMI was weaker than expected, while markets were more pre-occupied with the NZ/Australia Travel Bubble, agreed to by the NZ Cabinet. The NZD showed some initial support but drifted back to 0.7080, while the AUD held around 0.7550. The RBA will release their minutes today, which will probably reveal positive economic sentiment and improving conditions, which was shared by yesterdays Tankan report in Japan.