Wednesday December 2nd, 2020

The US$ selloff stalls amid vaccine rollouts, US stimulus talks and Sino/US trade stability. The US$ bounces slightly off its 2 ½ year lows as markets steady and trade related currencies lose steam. The US Treasury Secretary & House Speaker Pelosi held stimulus talks for time since Nov 3rd, with a proposed US$908 bln of stimulus being discussed. US President Elect Biden said he will not immediately act to remove the Phase 1 trade agreement with China. The UK becomes the first country to approve Pfizer-Biontech COVID-19 vaccine and plans a roll out of the vaccine as early as next week. CNY up 0.15% finding support from the Phase one trade comments, while Asian currencies drop 0.25% on average vs US$. Trading currencies retraced vs US$ with AUD down 0.1%, NZD & JPY drops 0.4%, MXN down 0.5%, with NOK down 0.9% and ZAR drops 1%.The US is expected to begin vaccinating by as early as mid-January as US death rates hit the highest number for a single day in six months.

Focus will remain on vaccine news; US Stimulus updates and the US ADP jobs data for intraday direction.

Oil prices drop slightly as markets waits for OPEC’s delayed meeting on Thursday with expectations that output cuts will likely extend through Q1/21. C$ maintains its overall strength, supported by vaccine optimism, US stimulus news and oil price stability. Canada posted 40.5% annualize growth in Q3/20 and factory activity expands for a fifth straight month. Intraday Cad labor productivity alongside US ADP jobs data and OPEC updates will be watched closely for direction. Support holds at 1.2924, while resistance at 1.3040 followed by 1.3172.

Euro breached 1.2 and extended its rally amid vaccine & US stimulus optimism, alongside strong data results. German Retail sales data significantly beat expectations, as well EUR PPI also beat expectations. The ECB Chief economist Lane will be speaking today, markets will watch for any comments on the recent strengthening of Euro. The Euro’s raise is significant ahead of the ECB’s meeting on DEC 10th where policy makers are expected to announce additional monetary easing measures. Support at 1.1925 with resistance raised to 1.2090, if breached look for 1.2209 (Apr 2018)

GBP volatility increases as Brexit concerns heighten ahead of the Dec31st deadline. GBP had initially rallied on the UK’s approval of the Pfizer vaccine news and then dropped quickly on negative Brexit concerns. The EU’s Barnier said that a Brexit deal hangs in the balance and that three issues remain open. The EU Commission President said that the trade talks are “so tricky and so difficult, but there could be a positive outcome in a few days”. UK vaccine roll out and Brexit updates will be watched closely. Support holds at 1.3280, with resistance holding at 1.3500.