Here is what you need to know on Monday, Tuesday 22:
Panic took over financial boards at the beginning of the week. The dollar appreciated sharply throughout the first half of the day but gave up most of its gains ahead of Wall Street’s close.
The dismal mood was triggered by the UK as PM Boris Johnson announced more restrictive measures following the discovery of a much more contagious covid strain. The negative sentiment cooled as the European Medicines Agency said that there’s no evidence that the just developed vaccines won’t work with the new coronavirus variant.
Additionally, there has been no progress in Brexit talks, but the opposite. Different UK authorities put into doubt the chances of a deal amid significant differences in fisheries. PM Johnson said that he would make a last-ditch push for a post-Brexit deal with a move on fisheries.
Meanwhile, the EU imposed a travel ban on the UK for 48 hours, while several other countries from around the world took similar measures.
On a positive note, US Senators agreed on a historic $900 billion coronavirus relief package and will vote on a proposed bill this Monday, alongside government funding for a whole year. The news was overshadowed by panic.
The GBP/USD pair plummeted to 1.3187 but recovered some ahead of the close on headlines indicating that the UK made a new proposal on fisheries and that EU leaders are looking into it. EUR/USD and AUD/USD were also able to trim most of their intraday losses, finishing the day not far below Friday’s closing levels.
Commodities also fell, with spot gold finishing the day below 1,880. WTI closed at around $48.00 a barrel.
Cryptocurrencies Price Prediction: Ripple, Chainlink & Stellar – American Wrap 21 December
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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