- The Nikkei has hit a 30yr high this morning driven by improved risk appetite following the Brexit deal last week and approval of the $2000 COVID-19 aid checks sought by President Donald Trump. The Nikkei 225 Index was quoted at 27356.90 at 04.18 GMT.
- The Democratic led US House voted in favour of the $2000 relief checks by 275 to 134 which now places the measure in front of the Republican controlled Senate who are due to convene today. Politically, it would be surprising to see the Republicans voting against this given the fall out that it would generate.
- The USD continues to struggle holding near 2 ½ year lows as the year draws to a close. The primary driver of the USD weakness is still the same, massive injections of USDs into the world’s financial system over the past 9 months has taken its toll. The threat of currency debasement and inflation remains the overriding macro drivers.
- The CFTC data shows the sour investor sentiment towards the USD. Short positions on the USD swelled to some $26.6bn in the week ending Dec 21 which is the highest level in three months.
- Turning our focus across the pond we have word that the EU-China investment deal is likely to be inked this week. This will provide EU firms with better access to Chinese markets, and protect EU investments in China. The deal has become more important for the Chinese since US President Trump started a trade war and thus the level of urgency was raised over the past year.
- Locally, the government has expressed concern about the level of non-compliance to the latest measures to curb the COVID-19 spread. “The non-compliance we have seen this weekend is worrying,” the government said on its official Twitter account on Monday. It, however, did not give any further details of the nature of the violations or where they predominantly took place in the country.
- We would like to draw attention to the stricter measures that have been enacted in South Africa overnight. SA moved to level three restrictions as the COVID-19 virus spreads through the country. There has been a blanket ban on the sale, transportation or distribution of alcohol. Curfew times have been tightened, and most public places, such as lakes, damns, beaches or parks in hotspot areas have been declared off limits. This will raise the alarm of local policymakers and potentially result in stricter measures for cargo or passengers coming from South Africa.
Looking at the day ahead we have very thin data calendars globally which will leave markets to focus on headline news for direction. We do expect trading ranges to be tight on account of the holiday period, however there is a risk of volatility for this very reason.