Weekly Market Commentary 28th December 2020

A post-Brexit Trade Deal between the UK and EU was finally agreed, at the ‘eleventh hour’, as expected. It appears to be a great deal and compromise on the ‘fishing issue’, has allowed an agreement to be made. The devil will be in the detail. The GBP surged on the news, jumping above 1.3600, while the EUR was steady at 1.2180. The UK has signed numerous deals globally, with the US/UK deal now green-lighted, which will be the mother of all trade deals. The flexibility that a free and independent Britain has now, will facilitate a surge in global trade, away from the insular, inwardly focused EU.

US Markets rallied into Christmas but the anticipated ‘Santa Rally’ was not forthcoming. The surge in virus cases across Europe and the US has seem massive disruptions and lock-downs. This will massively impact global economies and markets well into 2021. The Christmas/New Year period will be low volume and quiet across global markets. The AUD is attempting to regain 0.7600, while the NZD is trading around 0.7100. The fortunes of the commodity based, trade exposed currencies, remains very dependent on global markets and extremely vulnerable.

The Chinese attempts at trade sanctions have particularly impacted Australia, but signs of self-harm are coming to the fore. China is said to be suffering power shortages from the lack of Australian coal and Australia could further damage the Chinese economy with Iron ore supply, supported by allied trading/political partners?