Brexit: The chance to avoid a disruptive no-deal scenario clearly would be extremely helpful

Wall Street rallied overnight, despite some disappointing US data. Stimulus hopes and the rollout of Covid-19 vaccines supported the market. Energy, financials and healthcare sectors outperformed, while tech issues lagged. Core European bourses were higher, with the GER30 up 1.26%, and the UK100 underperforming, adding 0.66%, though held back by a firmer Pound. Treasury yields climbed amid bearish momentum from European bonds. Thinning holiday conditions exacerbated the moves and the break of key levels added to the selloff.

Gilts led a sell off in EGBs amid rumors that the UK and the EU are getting close to a post-Brexit trade deal. With Europe still firmly in the grip of Covid-19, the chance to avoid a disruptive no-deal scenario clearly would be extremely helpful, although even with an agreement no-tariff trade barriers will go up at the start of next year, which will add to an already difficult situation.

UK, EU press conferences likely expected today. The timing on press conferences may slip by a couple of hours.

• EUR – stabilized at 1.22.

• GBP– spiked top 1.3570 a breath below R1.

• JPY – in a triangle at 103.55. PP at 103.50 and R1 103.70.

• CAD – gains ground again amid risk appetite and Us inventories – currently at 1.2847.

• AUD –Currently at 0.7590.

• GOLD – gains some ground to  to $1879 high level.

• USOil –  climbs to 48.60 as US inventory draw, Brexit deal hopes boost risk appetite.

Today – Nearly all stock markets have an early closed for the extended Christmas weekend and there are no key data releases until January 4, with Brexit and virus developments the only topics to interest investors until then. Only Tokyo inflation tonight.

Biggest (FX) Mover – GBPCHF (0.61% as of 09:50 GMT) – It rallied to R1 to 1.2058. Fast MAs and BB still point upwards while the asset manage to break yesterday’s peak. Technical indicators hold positive, however they are also flat suggesting a potential consolidation H1 ATR 0.00174, Daily ATR 0.01315