Morning Report – Tuesday 8th December

Jon Robson, Head of Trading

“Unsurprisingly, there has been no breakthrough in Brexit talks. Whilst in previous weeks this has been largely insignificant, time is of the essence and any further delay will leave sterling vulnerable.”

Main Headlines

Boris Johnson is set to travel to Brussels for face to face talks with Ursula Von der Leyen on an EU-UK trade deal. There was no tangible progress yesterday, and senior officials in the EU put a trade deal possibility at “no more than 50-50”. Three key differences still remain, and Macron is fighting hard for French fisheries.

The UK is set to administer 800,000 doses of the Pfizer/ BioNTech vaccine today, and Oxford-AstraZeneca said they would deliver 4 million doses by the end of 2020. The US is expected to authorise the Pfizer vaccine by early next week, according to sources close to Anthony Fauci, while Germany aims to inoculate 10 million by the first quarter of 2021.

GBP

The pound was unchanged overnight after dropping around 2 percent yesterday morning before recouping some of its losses. Negative Brexit news caused the sell off yesterday, amid the rising probability of a no-deal Brexit. Talks will continue today, and if they are not resolved in the next 48 hours before the EU council meeting, this could be the death kneel for a Brexit agreement.

EUR

The euro is mostly unchanged against the dollar in early morning trading today. The Eurozone is set to release economic data on third quarter unemployment and GDP growth, which unless very wide of the mark will have little impact on the single currency as investors are focussed on the outcome of Brexit talks.

USD

The dollar is higher against most major currencies, including the Japanese Yen. Despite support from Donald Trump, the fiscal stimulus bill that garnered bipartisan support will miss the Friday night deadline as lawmakers are still stuck up on the details. The poor jobs report last week meant that a stimulus bill has become essential as it became clear that ordinary Americans are struggling without an injection into the economy.

Markets

Global equities are down this morning as rising Coronavirus cases in the US are starting to damage the rosy outlook that investors are looking ahead to. Uncertain Brexit negotiations and a postponed fiscal stimulus bill have also contributed to a tentative approach by investors. Bonds are unchanged this morning, while Oil prices are lower as investors look to retreat from the nine-month high seen last week.

Main Economic Data/Central Banks/Government (All times GMT)

6:30 a.m.: France 3Q Payrolls
7:45 a.m.: France Oct. Trade
9:30 a.m.: South Africa 3Q GDP
10:00 a.m.: Euro-Area 3Q Employment, GDP
10:00 a.m.: Germany, Euro-Area Dec. ZEW Survey

OECD holds Conference of the Global Forum on Productivity