As is often the case, we have seen a lacklustre period of trading over the holidays as participants have enjoyed the extended holidays. With the stock markets slowing down somewhat, but not giving back much of the gains seen during the month of November, the biggest move seen in the last week has been to the downside in the US Dollar. After a strong annual performance throughout the year, the relief of positivity in the trade negotiation progression has brought stocks further into play with forecasters expecting this bull run to persist into 2020. As such, the Dollar fell back last week against most major and emerging currencies.

The fall of the British pound has also been stemmed by this Dollar weakness. Having endured a rollercoaster last few weeks with the post-election surge to 1.3500 followed by the more steady, but no less impactful fall to nearly 1.2900, the last few trading sessions have us back above 1.3100, and that can certainly be attributed to weakness in the USD rather than GBP strength. With the UK Parliament on leave and Boris Johnson holidaying in the Caribbean naturally Brexit progress has stalled, but they will need to be back at full pace if they are to keep to the EU deadline of the end of January. Johnsons deal will come under further scrutiny from the house when they reconvene on the 7th. There were press reports over the weekend that EU member countries may stall in the instigation of trade deals with a divorced UK, however, it must be noted that theses deals work as a two way street with many countries more dependent on the UK than the converse.

As we move into the first week of the new year again the markets will be looking for any developments on the US/Sino trade agreement, as we still await the signing of the phase one deal any deviation from that path will clearly shock the markets which have it priced in.. Whilst this eventuality remains unlikely, it cannot be dismissed as a possibility. Trump hinted that they were trying to achieve ultimate agreement on the deal in the first week of the new year in a tweet on Christmas Eve. We are also seeing tensions heightening in North Korea with an expected missile test looming. 

With many global markets shutting early on Tuesday and shut on Wednesday, the bulk of the data comes at the end of the week with ISM Manufacturing data from the US and the rearranged release of the Minutes from the last Federal Reserve meeting on the same day. On Tuesday we see the Chinese Manufacturing PMI released, with the Caixin number on Thursday.

We would like to wish you a very Happy and Prosperous New Year.

The week ahead:

Monday – High Street lending data from the UK in the morning. In the Afternoon we get Chicago PMI data from the US

Tuesday - Chinese Manufacturing PMI in the am and US Consumer Confidence in the afternoon session. 

Wednesday - Markets are closed

Thursday - Light PMI data out of central Europe in the am as well as the UK. In the US session PMI’s from the US and Canada

Friday - Again just low-level PMI and CPI data from central Europe. From the UK we get lending and mortgage data as well as construction PMI. In the US session, we get ISM Manufacturing PMI before the FOMC Minutes are released at 7 pm