US market were closed for the Thanksgiving holiday, which meant little movement in global equities, bonds or currencies. European markets were fixated on the virus and vaccine, as the AstraZeneca vaccine trial was faulted and needs to be re-run. The post-Brexit EU/UK trade agreement is almost as painful as the Brexit negotiations themselves and drags on and on. The deadline was months ago but deadlines are continually extended. Expectations are for an agreement rather than a no-deal WTO ruled situation. The agreement is likely in the next few days, but expectations are low and the devil will be in the detail.
The GBP retreated back to 1.3340, while the EUR held above 1.1900, both in a holding pattern. Black Friday awaits in the US but markets will remain quiet until the ‘Big Dog’ returns next week. NZ Trade data was benign, but supply chain issues remain a serious threat to these trade exposed economies. The commodity currencies are trading at recent highs, with the AUD up to 0.7360, while the NZD attempts to hold around 0.7000. These currencies remain extremely vulnerable to macro economic and trade issues, while they are perceived as coping well, internationally. The proof will be in the pudding, as the reduction in ‘virus-welfare’ flows through into consumer data.
Fiscal and monetary stimulus remain key to the global economies, but the real economy will face some harsh realities, sooner rather than later.