European markets posted gains on hopes of a UK/EU trade deal being finalized. The EC announced that progress had been made, so hopes are high, for a compromise deal. This enabled the GBP to jump to 1.3470, although the EUR remained steady on 1.2170, amidst fears of the virus. The flash PMI data across Europe was stronger than expected but remains below 50, which is contraction. Economic and social lockdowns are being heavily imposed across Europe as the virus surges. This will be reflected in the economic data for the next quarter.
The US flash PMI data was better than expected, but Retail Sales contracted 1.1%, which was much worse than anticipated. Markets now await the Feds rate decision. They are expected to leave rates unchanged and keep up the QE program. The statement is likely to include some positive news for the economy, as the vaccine rolls out, but short term pain is expected to continue. Congress appears to be on the verge of a Bi-Partisan bailout package of around $900 Billion.
The Australian economy is performing better than most and their flash PMI numbers, reflected that. The Chinese trade war appears to be accelerating, but global allies appear ready to support the Australians, in a fight back. The Australian economy is travelling better than most and this is translating into positive economic data. The AUD is trading above 0.7550, while the NZD holds 0.7070, ahead of the release of important local GDP numbers.
The virus, vaccines, stimulus and Central bank commentary all remain the drivers of markets.