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During another shortened trading week financial markets participants are set to focus on the signing of the latest US COVID-19 stimulus package, high-impact economic data from the Chinese economy, and a key vote in UK Parliament over the newly agreed Brexit deal.
Starting with the latest Brexit deal, the British pound and the FTSE 100 have got off to a solid start this morning, due to UK PM Boris Johnson announcing that he had a finally signed a Brexit deal on Christmas Eve.
Source by ActivTrader.
Personally, I would have expected more of a positive reaction that we are currently seeing, however, traders and investors may be cautious as the deal still has to be voted on in UK Parliament this Wednesday. Most analysts expect the deal to be passed into law, as the main opposition, the Labour Party, are said to be backing the deal.
Any pullbacks in sterling and the FTSE 100 in early-week trading are likely to be seen as solid buying opportunities by traders and investors. An acceleration of news surrounding the spread of COVID-19 is likely to dent market sentiment.
Source by ActivTrader.
Looking at the latest U.S. stimulus news in further detail, President Trump apparently signed the bill with a “strong message” that the wasteful items inside the bill still need to be removed. The House will also vote later today on increasing the stimulus checks from $600.00 to $2000.
If the $2000 stimulus checks are agreed we could see more gains for gold, and also more protracted weakness in the greenback. Global stocks are likely to receive somewhat of a boost as well.
Source by ActivTrader.
US stock markets look primed for further gains this week and recovered extremely well from the lows of last week, especially considering the initial pressure they started under. The S&P 500 in particular looks very bullish at the moment, with traders basically scooping up the dips in expectation of a new all-time high.
In reality, traders have very little to get excited about on the economic calendar this week, hence stimulus and technical factors are likely to be a big driver of the US dollar and the stock market.
Chinese Manufacturing data is likely to be a market mover this week also, especially with some of the tech related companies inside the S&P 500 and the Nasdaq. Solid PMI data from the Chinese economy certainly bodes well for more upside this week.
Source by ActivTrader.
Gold had a very strange week last week, and was promptly smacked down from $1,900, after initially staging a promising rally during last Monday’s mini market meltdown. Gold has been vastly outperformed by Bitcoin over recent months and tends to rally when US stimulus and QE are in the mix.
Even with the initial optimism about a coming stimulus deal last week, gold quickly ran out of buyers above $1,900. Maybe the market was hoping for a large stimulus package.
The yellow metal really needs to shine this week that the stimulus package has been agreed, or technical sellers may start to come back into the market.
I tend to believe that gold and silver are going to be very volatile next year, especially while COVID-19 continues to rampage the US and European economies.
The EURUSD failed to close the week above the 1.2200 handle last week, after suffering a big rejection from the 1.2240 area. The EURUSD pair is a great barometer of sentiment towards the US dollar, as it makes up such a large percentage of the US dollar. With that said, it still does not look ready to completely roll over.
Source by ActivTrader.
This fact alone should worry US dollar bulls, as the EURUSD pair really does have sparce resistance until the 1.2450 to 1.2500 area once it clears the 1.2300 benchmark level. Such a breakout could be the catalyst for widespread US dollar selling.
As I have previously mentioned a Biden administration is not seen as being a US dollar positive. So long-term speculators are not likely to close EURUSD longs, especially with the potential of more upside in the first few years of Biden’s term.
