11 Dec

Lagarde Downgrades Eurozone Recovery

December 11, 2020

By Orbex

Bears Look for Another Push

The US index could not capitalize on its 4-day winning streak, as it closed 0.30% lower yesterday.

The dollar had been attempting a turnaround in the past few days, however, US jobless claims came in far worse than estimates expected, and higher than last week’s reading.

The number of Americans filing for unemployment insurance rose to its highest level in three months.

Added to this, the country witnessed a new daily record of Covid-19 related deaths, as further restrictions are causing continuous layoffs.

ECB To Inject €500bn

The euro was given some optimism yesterday as it closed 0.48% up on the back of the ECB meeting.

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The ECB is to inject a further €500bn into its corona-relief bond-buying scheme, bringing the total to €1.85 trillion.

However, ECB president Lagarde said on Thursday that staff at the central bank had downgraded short-term GDP forecasts.

Expectations for GDP growth is now at 3.9% for 2021, compared with a forecast of 5% made in September.

Could we witness a drop to yearly lows in 2021?

Negative Brexit Headlines Hurt the Pound

The pound was down by 0.77% on Thursday as it fell through the 1.33 level.

A sharp sell-off was accompanied by the increasing risk of a no-deal, after a decisive breakthrough in trade talks faltered.

Boris Johnson said there is a strong possibility that the UK will fail to strike a post-Brexit trade deal with the EU.

Could we see a sharp reversal in the pound as we begin 2021?

Indices Mixed on Stimulus Talks

US stocks closed a mixed session yesterday as investors looked at the progress (or lack thereof) on new fiscal stimulus talks.

Indices were indecisive as the Dow is a touch lower, whilst the Nasdaq showed a small gain.

Analysts took into account that the US recovery is running out of steam, as jobless figures disappoint.

Policymakers are still arguing over the Covid-19 stimulus package, with Steven Mnuchin, stating they were making a lot of progress with respect to the negotiations.

Gold Loses Grip of $1850

Gold closed 0.18% lower on Thursday, nursing losses after declining for the last two days. Although optimism over the coronavirus vaccine probes the gold bears’ dominance.

With Canada being the latest country to approve the Pfizer-BioNTech vaccine, it is just a matter of time before other countries follow suit.

Are we about to see a momentous shift in risk appetite?

WTI Eases to 9-Month High

Oil advanced by almost 3% yesterday hitting a 9-month high, closing just shy of $47.

The imminent approval of additional countries approving a coronavirus vaccination boosted the black gold.

The expectations of strengthening oil demand in 2021 sent prices rallying.

How long before we get to pre-pandemic levels?

By Orbex


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