Archives of “December 28, 2020” day

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Brexit negotiations over? Not quite just yet..

  
  Analysis

A trade deal was agreed but negotiations won’t stop there

Brexit
Although both sides have come to some agreement on trade, Brexit isn’t quite over just yet as we look towards the new year.
While there is an agreement for zero tariffs on trade of goods, just be reminded that there is no agreement whatsoever on services – and that includes financial services.

 

As things stand, the Commons will vote on the Brexit deal on 30 December with the EU set to also ratify the deal some time in early January (presumably next week).
All that is a formality but thereafter, we are likely to see further negotiations to try and broker a deal on financial services. That said, expectations are low for anything substantial.

(more…)

UK’s Gove: If AstraZeneca vaccine rollout goes well, we’ll be in a place to lift restrictions quickly

  
Analysis, COVID-19

Gove building up further optimism going into the new year

The UK is widely expected to approve the AstraZeneca/Oxford vaccine in the coming days, with the rollout then set to begin in the first week of January. The announcement is expected some time this week, as early as tomorrow so watch out for that.
While I wouldn’t doubt the optimism as more vaccines are rolled out, I would take Gove’s remarks with a pinch of salt. Up until Christmas eve, there has been just over 600,000 people that have been vaccinated in the UK.
While the AstraZeneca/Oxford vaccine may be easier to store/transport and is cheaper, it doesn’t take away the fact that it is still going to take a long while before we see the impact of the vaccines on the health crisis in general.
In the meantime, the UK still has to deal with a staggering amount of cases and it is tough to see how the government can change things up despite such remarks by Gove.
UK

BOJ December monetary policy meeting Summary of Opinions

  
Analysis, Economy

Bank of Japan Dec 17 and 18 policy meeting summary

Main Headline points via Reuters:

 

  • BOJ must examine extending deadline, possibly expand content, of fund-aid programme timing with compilation of govt’s new stimulus package
  • important to examine BOJ’s monetary easing as pandemic means it will take even more time to achieve BOJ’s price goal
  • good to eye March meeting in laying out findings of BOJ’s policy examination as it will focus on operation of current framework
  • BOJ must comprehensively review anew what strategy it should take in hitting its price goal
  • BOJ must examine its strategy, policy means and communication to ensure japan does not return to deflation
  • BOJ doesn’t need to tweak YCC, can also maintain its commitment including its pledge to hit 2% inflation
  • BOJ must examine pros and cons of its policy, must seek ways to enhance sustainability, effect of its policy as needed
  • BOJ must seek ways to more flexibly adjust its ETF buying as its monetary easing is prolonged
  • BOJ must be ready to effectively respond to changes in economy, financial conditions by heightening sustainability of YCC, asset buying via more flexible operation
  • more meticulous control of yield curve will become necessary as moderate steepening of yield curve has some merits
  • important for BOJ to take swift, effective policy response in coordination with govt, other central banks
  • appropriate for BOJ to cut short, long-term yield targets, strengthen commitment on monetary easing
  • BOJ must help companies achieve sustainable growth, creating bigger corporate bond market important
  • BOJ must continue to keep eye out on risks including abrupt moves in FX market
  • there is considerable risk japan will return to deflation

 

More of the same from the Bank, there is no indication of any winding back of easing. The BOJ highlight March as a meeting to watch for perhaps even more.

Interesting the summary makes specific mention of ‘abrupt moves in FX’. This is code for strengthening yen, the BOJ does not want the yen to gain and will attempt to jawbone it lower if it does. You may recall the news from last week that Prime Minister Suga has drawn a line in the sand at 100 for USD/JPY.

US press says Trump has indicated he will sign coronavirus stimulus bill

  
  Analysis

The Washington Post with the reoprt:

  • Trump has indicated that he will sign the stimulus bill into law … two people familiar with his plans said Sunday evening
If you need a giggle, the piece goes on (bolding mine):
  • The people spoke on the condition of anonymity because the matter remained fluid and they weren’t authorized to disclose Trump’s plans. They said Trump had repeatedly changed his mind on the matter.
The bottom line is no-one knows until the next tweet hits. From January 20 there will be an adult presence in the White House, so at least there is that.

Coming up – the European Parliament will meet on December 28 to discuss the Brexit trade deal

  
  Analysis

During European time, of course, but something to keep an eye open for.

With the agreement being finalised just prior to Christmas the European Parliament has indicated its will not have time to hold an emergency voting session before December 31. Instead, they plan to apply the EU-UK agreement provisionally. That’s what today’s meeting is about.
Background:
  • Brexit deal done, UK parliament to vote Dec 30

In addition to the UK parliament voting every one of the EU member states has to sign off on the agreement. Once done the deal goes to the European Parliament for members to vote on ratification of the deal.

During European time, of course, but something to keep an eye open for.  

Monday morning open levels – indicative forex prices – 28 December 2020

  
Analysis, Forex

Good morning, afternoon or evening to all ForexLive traders and welcome to the start of the new FX week – the final one for 2020.

On a Monday morning, market liquidity is very thin until it improves as more Asian centres come online – and its even less liquid than usual today due to the holiday mode many liquidity providers are in.

Prices are liable to swing around on not too much at all, so take care out there.
Guide:

  • EUR/USD 1.2188
  • USD/JPY 103.56
  • GBP/USD 1.3574
  • USD/CHF 0.8883
  • USD/CAD 1.2848
  • AUD/USD 0.7601
  • NZD/USD 0.7105
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