Positive vaccine and lockdown news buoys markets
Equities around the world surged this morning after news that Moderna Inc’s Covid-19 vaccine was shown to be 94.5% effective. The S&P 500 opened at fresh record highs. News that the Biden administration does not support another nationwide lockdown coupled with a Trump tweet that acknowledges that Joe Biden won the election were also supportive of a risk-on mood. Asian assets and currencies rose after 15 Asia-Pacific nations signed the biggest trade deal in history. US Treasury yields edged higher, gold is off slightly and oil up slightly. A full docket of US economic data will be released this week.
Monday: US Empire State Manufacturing Survey (Nov), Canada Manufacturing Sales (Sep), Bloomberg Survey of Eurozone Economic Forecasts (Nov)
Tuesday: US Retail Sales (Oct), US NAHB/Wells Fargo Housing Market Index (Nov)
Wednesday: US New Residential Construction (Oct)
Thursday: US Leading Economic Index (Oct), Initial Jobless Claims (week ending Nov 14)
Friday: Canada Retail Sales (Sep)
November 16, 2020
EUR/USD 1.1828 GBP/USD 1.3183 USD/CAD 1.3090 AUD/USD 0.7294 USD/JPY 104.5900 USD/CNH 6.5797 USD/ILS 3.3558 USD/MXN 20.3384 USD/CHF 0.9134 USD/INR 74.6025
This morning’s risk-on mood in the markets pushed the safe-haven Japanese yen and Swiss franc lower. On the other hand, major commodity currencies made gains, including the Norwegian krone, Canadian dollar, and the New Zealand and Australian dollars. The Asian-Pacific nation trade deal signed yesterday fueled rallies in Asian emerging market assets and currencies.GBP
The UK pound is little changed over the weekend. Investors are optimistic that the UK-EU trade negotiations will reach a trade deal prior to the December 31 deadline. Prime Minister Boris Johnson is working to get his administration back on track after he was forced to self-isolate after close contact with a lawmaker who tested positive for the coronavirus, and after his most trusted aide, Dominic Cummings, and Communications Director Lee Cain, both resigned.EUR
The euro is virtually unchanged over the weekend. Friday’s release of Eurozone 3Q GDP increasing by 12.6% compared to Q2 had little impact on markets. According to a Bloomberg survey of economists released this morning, the eurozone economy will contract by 7.3% in 2020, expand 4.7% in 2021 and 3.4% in 2022.CAD
The Canadian dollar was the second strongest of the G-10 currencies after the Norwegian krone. Canadian manufacturing sales for September of +1.5% met expectations and exceeded August’s decline of 2.0%.ASIA/PACIFIC
Yesterday, fifteen Asia-Pacific counties signed the biggest free-trade deal in history. After nearly a decade of negotiations, the Regional Comprehensive Economic Partnership (RCEP) is the first agreement to bring together China, Japan and South Korea. Asian EM currencies performed well following news of the agreement.
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