A decisive election win to remember in UK politics and a “phase one” trade deal agreed between US – China just steps before the finishing line stole the show.
Lagarde’s first decision as the ECB leader, the last Fed decision of the year and a surprise of a 1.2% rise in German exports in October concluded the week.
U.S. Washington and Beijing have agreed to a “phase one” trade deal including suspending U.S. tariffs on $160 billion in Chinese goods. The agreement covers intellectual property, technology transfer, agriculture, financial services, currency, and foreign exchange. Trump announced that “phase two” trade talks would start immediately. But Beijing made it clear that moving to the next stage of the trade negotiations would depend on implementing phase one first. While markets cheered the December rally, few expect the trade deal rollercoaster ride to be quite over yet.
Britain’s election delivered a bigger-than-expected parliamentary majority for Prime Minister Boris Johnson’s pro-Brexit Conservative party. Thus, the prospect of a hung parliament and another Brexit delay vanishes. It now holds a majority in Parliament, which means Johnson has an easier path to push his Brexit bill through a vote.
The EUR/USD posted gains for a second straight month and briefly touched a four-month high.
GBP/USD enjoyed an excellent week, gaining 1.5%. The pair briefly climbed above 1.35 line, for the first time since May 2018, before retreating.
The AUD/USD enjoyed an excellent week, posting gains for a second successive month, after having touched a high of 0.6939, its highest level since July.
The Dollar/yen gained 0.7% last week, erasing the losses seen a week earlier. Investors are keeping an eye on the release of the BOJ rate decision.
START TRADINGLQDFXperts – The week ahead – A totally done deal and a decisive election win
US GDP, the BoE’s rate decision, and various data from all over the world will set the tone for the upcoming week.
- On Monday (16.12) Euro-zone PMIs are due to come. Investors wait to see if the recent recovery can turn into growth, or if it is only temporary before another downturn. Also, the UK PMI is expected after the preliminary ones before the election.
- On Tuesday (17.12) the UK jobs report is due to come. Unemployment has stood at the historic low of 3.8% in September. The results may influence the BoE’s rate decision due on Thursday.
- On Wednesday (18.12) investors await German IFO Business Climate, UK inflation figures, and New Zealand GDP.
- On Thursday (19.12) all eyes are on Bank of England which will be holding its first monetary policy meeting after the recently concluded election. Also, investors are interested in Japanese rate decision where probably the Bank of Japan will likely leave rates unchanged at the last meeting of the year.
- On Friday (20.12) the final reads of the UK GDP and US GDP will be of interest. No surprises are expected. Any change may move markets amid thin liquidity, as many traders will have left for their Christmas holidays.
Follow this week’s economic calendar.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, CNBC, FX street