GBP: Brexit headlines due

EUR: Helped by German unemployment

USD: Dollar weaker as market takes a look at Biden win, stimulus

Sterling

Sterling is sat on tenterhooks again waiting for news from EU negotiators that could hit the newswires today or tomorrow. GBP volatility remains high in comparison to a number of its G10 counterparts and the next few weeks should see it pull higher as we sit 2 weeks from the government’s own deadline for a deal on Brexit.

Euro

It is PMI day in Europe with most countries within the Eurozone reporting their latest manufacturing sentiment numbers this morning. Early indications released a week ago suggested that concern was rising as case numbers and lockdown procedures both increased. Italy’s number is due at 08.45, France is at 08.50, Germany at 08.55 with the Eurozone average at 09.00.

Yesterday saw German unemployment drop by 108,000, the best month’s performance since 2012 and alongside an improved retail sales picture shows that the heartbeat of European economic growth is moving in the right direction. That being said, we do expect unemployment to increase once again as we move into 2021 as support measures fade away and structural changes in how and where people work emerge.

US Dollar

A strong impulse of dollar selling by portfolio managers, increased belief of a Biden electoral win after a circus of a debate and the rekindled hopes that the US may be able to agree on a stimulus package has sent the USD lower in the past 24hrs with dollar bears hoping that the data due in the next couple of days (manufacturing sentiment and jobless claims today  and payrolls tomorrow) are enough to keep equity markets pushing higher on the promise of increased funding.

All of this is happening as companies like Disney, Goldman Sachs and retailers announce job losses with U.S. airlines and carriers preparing to get rid of tens of thousands of workers should additional aid not be forthcoming.

Elsewhere

Higher equity markets have translated into gains for commodity currencies without those currencies really having to do much. It is not quite bobbing about on the lazy river of markets, but these correlations remain strong and a continuation of US stimulus hopes will help places such as CAD, AUD, and NZD throughout.

Have a great day.