Daily Market Commentary 23rd December 2020

European equity markets regained some of the previous days losses, more as a technical correction, than from any major event. UK GDP expanded GDP by 16% for Q3, slightly better than expected, but still down 8.6% for the year. This recovery will have been severely damaged by the recent lock-downs and closures across Europe and the UK. The mutating virus continues to spread and the EU/UK trade agreement is still in a state of deadlock. The GBP has retreated back to 1.3350, while the EUR has slipped back to 1.2150, as the US Dollar fights a rear-guard action.

US GDP Q3 was confirmed an astronomical 33.4% growth rate, even better than the phenomenal 33.1 indicated, which leads the world. The US recovery in Q4 will also be tempered by the resurgent virus, although the vaccine distribution has begun and bodes well for 2021. The rebound in the reserve forced the trade exposed commodity currencies lower, with the AUD retreating to 0.7520, while the NZD fell to 0.7040.

The virus and the vaccine appear to be dominating pre-Xmas markets and expected bailouts and monetary stimulus, are baked into the cake.