Market Commentary – December 18, 2020

Kevin Jock

18th December 2020

   The US dollar fell to its lowest level in more than two years against major currencies on Thursday. The Fed’s reassurance to its current policy stance also boosted the interest of high-risk currencies after more stimulus measures from the US and a trade agreement. According to members of Congress, they are close to reaching an agreement to provide US$900 billion in aid to the American, which has boosted market sentiment. Before federal funding expired at 12:01 AM Eastern Time on Saturday, lawmakers had little time to pass a government funding and pandemic relief plan.

   US Dollar Index has dropped nearly 13%, from 102.82 to 89.9, since March, when it spiked to a three-year high as the coronavirus pandemic plunged the US. The economy was into recession, driving investors into more safety currency in the world. USDJPY dropped to as low as 102.9 today.

   The rise of Bitcoin, the world’s most well-known cryptocurrency, is supported by the needs of larger investors, who have been Attracted by earnings potential and inflation hedging characteristics.

   Technology stocks pushed the S&P 500 and Nasdaq to record highs on Thursday as the market’s optimism over the coronavirus stimulus rose, which ignored the signs of economic pressure brought about from the coronavirus pandemic.

   The U.S. prepares to ship 5.9 million doses of coronavirus vaccine on Thursday. At the same time, the U.S. recorded the highest single-day death cases of 3580 from coronavirus.


Figure 1 (Source: IS Prime): USDJPY 1-Month Chart

Headliner to Review

  • In the United States, the number of people claiming unemployment benefits for the first time in the week ended December 12 unexpectedly rose for two consecutive weeks, rising by 23,000 weekly to a total of 885,000, a record of more than three The month’s high. The market originally expected to fall back to a total of 800,000, reflecting the surge in confirmed cases of coronavirus pandemic and restrictions on activities in place have led to a continuous decrease in new positions.

  • The Swiss National Bank kept the target interest rate unchanged at minus 0.75%, maintaining the lowest global interest rate, in line with market expectations. The bank said that the coronavirus pandemic will continue to have a major negative impact on the economy. The central bank maintains an expansionary monetary policy with a view to stabilize economic activities and prices.

  • The Bank of England has kept official bank rate unchanged at the lowest levels on record at 0.1%. The Asset Purchase Facility remained unchanged at 895 billion.

Headliner to Watch

  • Retail Sales m/m expected to drop from 1.2% to -4.0%.

  • German ifo Business Climate expected to decrease from 90.7 top 90.2. German PPI m/m expected to remain unchanged.

  • In Canada, Core Retail Sales m/m expected to drop from 1.0% to 0.1% while Retail Sales m/m expected to drop to 1.1% to 0.1%. NHPI m/m expected to increase from 0.8% to 0.9%.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Antony Tan
Ben Li
Kevin Jock