Growing tensions between the US and China, as well as another halt in Brexit negotiations

Stock market indices have stopped going up as the news about renewed tensions between the US and China was released. On Thursday evening, it became known that the United States was ready to blacklist dozens of Chinese companies. Investors' appetite for risk has plummeted, but the indices show more consolidation than preparation for a correction.

The Brexit issue is still of greater importance to the market. David Frost claims that negotiations are blocked again, and time is running out. Still no consensus has been found in the fishing question. Ursula von der Leyen, for her part, warns that "great differences" persist and that "overcoming them will be very difficult." Given such conditions, sterling started declining.British Gilts has increased in price since the opening of the European session, while the yield has fallen to 0.253%.

The market in the Brexit issue will take into account the statements of the Bank of England. On Thursday, the British monetary regulator stated it would leave interest rates unchanged at 0.1% and bond buyback at £875 bn. However, the regulator is ready to quickly adjust the policy in case of failure in the negotiations. Any aggravation in the negotiations between the EU and the UK will imply for investors milder terms of the Bank of England lending in the future.

As a result of new shocks, the dollar index has transitioned to correctional growth. In the European session, USDX has reached 89.838 (+0.11%). The dollar bulls are backed by pending talks in Washington, DC for a new aid package. No agreement has yet been reached, and negotiations have been postponed until the weekend.

Market indicators

Major market stocks are trading as usual:

S&P 500 (F) 3.712,38 -0,37 -0,01%

DAX 13.691,25 +24,00 +0,18%

FTSE 100 6.576,29 +25,23 +0,39%

The news feed for 2020.12.18:
  • – 10:00 UK Retail Sales (MoM) (GMT+3);
  • – 12:00 German IFO Business Climate Index (GMT+3);
  • – 12:00 Baseline Retail Sales (MoM) in Canada (GMT+3).

by Justforex, 2020.12.18

We advise you to get acquainted with the daily forecasts for the major currency pairs.

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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