Surging virus numbers across the US and Europe and the political restrictions imposed, are damaging the economic recovery and market sentiment. Equities opened the week lower, as virus infections and death rates rise, despite the imminent distribution of vaccines, beginning this week. There have been the tidal-like moves in the markets for some time, but the massive liquidity swamping markets usually prevail, with the asset rally continuing. US Non Farm Payrolls on Friday reflected the weaker data, as the lockdown restrictions impact the economy and the statistics reflect that. The US Congress appear to be close to signing a $900+ bail-out package, which will offer some assistance and relief.
European markets were dominated by the contentious post-Brexit trade negotiations between the UK and Europe. They have missed deadline after deadline, as these negotiations always do, but the UK PM refuses to bow to renewed EU demands. This forced big gyrations in the GBP overnight, at one stage plunging to 1.3230, but later recovering to trade 1.3370. The EU summit this weekend may well determine whether the trade deal will be agreed or not and if the UK reverts to WTO rules. The EUR traded 1.2130, seemingly unconcerned over the trade drama, but sustained by higher German Industrial Production.
Commodity currencies were also hurt by market uncertainty early in the trading day, but strong Chinese trade data helped support the trade exposed, commodity currencies. The NZD pushed back to 0.7050, while the AUD rebounded to 0.7440, after stronger than expected Job Ads. The Australian economy is recovering relatively strongly, compared to global competitors and internal border re-openings will only enhance this.