Fears of recession eased by data

A run of better data recently has helped easing fears of a recession. Also phase one trade deal appears to have calmed some of the uncertainty on the global outlook.

The announcement last week of the so-called Phase One U.S.-China trade deal lifted global economic prospects. But the market gains appeared to lose some momentum on Wednesday as investors craved more details about the agreement.

Another risk factor is an almost certain impeachment of President Donald Trump after a vote in the U.S. House of Representatives planned for later in the day.

The U.S. dollar strengthened on Wednesday. U.S. economic data suggested the Fed was unlikely to cut interest rates further and as liquidity shrank before the coming holidays.

The dollar rose against the euro, which has struggled to stay above its 200-day moving average. The greenback was also higher against the pound, which has lost all its election gains on fears of a Brexit without a trade deal.

The dollar index that tracks the dollar against six major currencies jumped to a six-day high of 97.343 and was last up at 97.288.

German business morale rose more than expected in December to a six-month high, the Ifo survey showed on Wednesday. The data suggested that Europe’s largest economy picked up steam in the fourth quarter.

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Forex – Data eased fears of recession

Analysts said Thursday’s central bank meetings in Britain, Japan, Sweden and Norway could bring some volatility.

Japan’s yen was little changed at 109.49 per dollar

The New Zealand dollar fell to a one-week low of 0.6555 against the dollar.

German business morale rose more than expected in December. But data failed to help the falling euro, which was last down 0.2% at $1.1124, below the 200-day moving average of $1.11515.

The pound fell 0.2% on Wednesday as traders assessed the risk of a hard Brexit at the end of the year. Political news expected to take precedence over economic data. The sterling has collapsed more than 3% from an 18-month high of $1.3516 struck after Johnson’s victory in general election.

Sterling slid 1.5% on Tuesday in its largest one-day fall this year as fears of a hard Brexit resurfaced. Against the euro it was down around 0.2% at 85.02 pence.

Oil prices fell on Wednesday after U.S. industry data showed a surprise build up in crude inventories. But losses were kept in check by expectations for an uptick in demand next year on the back of progress in resolving the U.S.-China trade row.

Brent dropped 26 cents, or 0.4%, to $65.84 a barrel by 1145 GMT on Wednesday. U.S. West Texas Intermediate (WTI) fell 42 cents, or 0.7%, to $60.52 per barrel.

PLEASE NOTE The information above is not investment advice.

Sources: Reuters, Investing, CNN money