Brexit “still has some legs”, US bipartisan group divides stimulus into two packages

Anil Panchal FXStreet

Having received upbeat Brexit news during the weekend, relating to the continuation of talks for one more week, the BBC Political Correspondent Iain Watson tweets increased optimism among the sources close to Brexit talks with the European Union (EU). However, it was also conveyed that the fisheries and level playing field aren’t the only problems.

Sources close to the #brexit talks with the #eu say the process 'still has some legs' but there are warnings that detailed discussions are also throwing up more problems - beyond the classics of fishing, and level playing field. We will have more @bbcnews @BBCOne just after 10.
— iain watson (@iainjwatson) December 13, 2020

Elsewhere, CNN’s Senior Congressional Correspondent Manu Raju came out with the update on the US coronavirus (COVID-19) stimulus suggesting that the total package will be in two parts and the final details will be presented soon.

The bipartisan group of House and Senate negotiators has made a decision: Separate their proposal into two packages, per sources. One bill will be a $748B proposal, which includes money for small business loans, jobless benefits and vaccine distribution - among other matters.
— Manu Raju (@mkraju) December 13, 2020

The other: A package that includes $160 billion for state and local aid that includes liabilty protections for businesses and other entities - the two biggest sticking points. It’s uncertain how many senators and House members from the group will sign onto the second proposal
— Manu Raju (@mkraju) December 13, 2020

FX implications

Both these events are positive to the market risks and hence AUD/USD bulls keep the reins around the mid-0.7500s during the early Asian session on Monday. On the other hand, GBP/USD begins the week with an upside gap of over 130 pips, currently around 1.3330, on the Brexit-positive news.

Important reads

GBP/USD early price indications, heavily bid on Brexit sentiment

EUR/GBP eyes week-start gap down below 0.9100 on Brexit news

AUD/USD: Bulls battle 0.7550 amid cautious optimism

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

EUR/USD holds firm above 1.1900 as US NFP looms

EUR/USD holds its upbeat momentum above 1.1900 in the European trading hours on Wednesday, helped by a broadly weaker US Dollar. Markets could turn cautious later in the day as the delayed US employment report for January will takes center stage.

GBP/USD remains above nine-day EMA near 1.3650

GBP/USD recovers its recent losses from the previous session, trading around 1.3680 during the European hours on Wednesday. The technical analysis of the daily chart indicates a sustained bullish bias, as the pair trades within an ascending channel pattern.

Gold sticks to gains near $5,050 as focus shifts to US NFP

Gold holds moderate gains near the $5,050 level in the European session on Wednesday, reversing a part of the previous day's modest losses amid dovish US Federal Reserve-inspired US Dollar weakness. This, in turn, is seen as a key factor acting as a tailwind for the non-yielding yellow metal ahead of the critical US NFP release.

US Nonfarm Payrolls expected to show modest job gains in January

The United States Bureau of Labor Statistics will release the delayed Nonfarm Payrolls data for January on Wednesday at 13:30 GMT. Investors expect NFP to rise by 70K following the 50K increase recorded in December.

S&P 500 at 7,000 is a valuation test, not a liquidity problem

The rebound from last week’s drawdown never quite shook the sense that it was being supported by borrowed conviction. The S&P 500 once again tested near the 7,000 level (6,986 as the high watermark) and failed, despite a macro backdrop that would normally be interpreted as supportive of risk.

Bitcoin price slips below $67,000 ahead of US Nonfarm Payrolls data

Bitcoin price extends losses, and trades below the lower consolidating boundary at $67,300 at the time of writing. A firm close below this level could trigger a deeper correction for BTC. Despite the weakness in price action, institutional demand shows signs of support, recording mild inflows in ETFs so far this week.