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Original title: Decision analysis: Bad news from Britain’s no-deal Brexit “most likely” spurring selloff in global safe-haven market
FX168 Financial News (London) News from 15:00 to 22:30 on December 11, Friday (December 11) European market afternoon,Dollar indexIt fluctuates in a narrow range near the 91.00 mark, and has risen from a low near 90.60; spot gold has recovered from the previous drop to $ 1,822.57 an ounce, and once returned to the $ 1,840 mark.
In a few days, Brexit progress has once again become the center of attention. Yesterday, the president of the European Commission, Von der Lein, expressed pessimistic expectations in a briefing on the Brexit negotiations at the EU summit. Sources said that he said the possibility of a Brexit without a deal is greater than there is a deal.
British Prime Minister Johnson said in an interview today that Britain is “very likely” to leave the European Union without a deal. British Prime Minister Johnson told Cabinet last night that Brussels wanted to “punish” Britain for its refusal to comply with EU rules, and thus warned of the need to prepare for a no-deal Brexit. The prime minister declared that the European Union hopes to treat Britain as a “twin” and must replicate everything it has done in the future. “Obviously this is not a smart way to move forward.”
The leaders of the European Union continued to maintain a firm position. French President Macron said: “I don’t want to eat the whole cake, no. All I want is a cake that is worthwhile, because I am not going to give up my part.”
Italian Prime Minister Conte also declared today that Italy cannot be allowed to lose strategic assets. The EU cannot succumb to the issue of a level playing field. The fundamental issue is at stake and we must prepare for a hard Brexit.
A senior EU official said today that EU leaders rejected Johnson’s proposal to discuss Brexit with German Chancellor Merkel and French President Macron. Officials reportedly said that all negotiations must take place through the European Commission. Downing Street stated that the Prime Minister will “redouble his efforts” to reach an additional agreement, which includes plans to travel to Paris or Berlin.
Under these circumstances,GBP/ The dollar plummeted nearly 200 points in one day, and the lowest reached 1.3134 in European time, with an intraday drop of more than 0.8%.
Commerzbank analyst Thu Lan Nguyen believes that the market may have “assimilated the expectation that an agreement will not be able to be reached in the next few days,” so when the news of the end of trade negotiations comes, the market exchange rate will not fall into serious chaos. “But it’s also possible that the market had a ray of hope for a final deal and was shocked by the news that there was no deal. This will cause the market to fluctuate significantly.”
In addition, the market is also negatively affected by the stagnation in the negotiations of the US stimulus bill and the “bad news” of the new corona vaccine. The Speaker of the US House of Representatives, Nancy Pelosi, said Thursday that negotiations on the stimulus bill may extend beyond Christmas, but it is best to pass the federal bill before December 18. Pelosi and Treasury Secretary Steve Mnuchin continue to disagree on state aid and liability shields for employers.
Economic data from the United States is also worrying. As of the week of December 5, the number of initial jobless claims in the United States reached 853,000, far more than the estimated 753,000. The November US PPI monthly rate announced today was 0.1%, the lowest since June. The institutions commented that the US PPI hardly rose in November, supporting the view that inflation has remained subdued in the short term, as the outbreak of the new corona epidemic has suppressed the labor market and the demand for services.
As for the new corona vaccines, France’s Sanofi (Sanofi) and Britain’s GlaxoSmithKline (GSK) said on Friday that their vaccines have not produced a strong immune response in the elderly, so they will have to wait at least until last quarter of 2021. Launch the new corona vaccine. Australia also launched a vaccine that produced a “false positive” response to HIV.
Global financial markets are cloudy by the day. In addition to the British pounds,EURIt also fell seriously. World stock markets fell significantly. The UK FTSE 100 index, the German DAX index and the French CAC index fell 0.58%, 1.46% and 0.81%, respectively. The futures market indicated that US equities will open lower today. The Dow Jones, S&P and Nasdaq indices fell 0.49%, 0.63% and 0.59% respectively.
Risk aversion in the market increased. The dollar and gold rose. Gold rallied above the $ 1840 mark at the end of the European market.
The market will continue to pay attention to the progress of the US stimulus bill, the news of the new corona and vaccine epidemic, and the performance of US stocks.
Analysis of the main currencies:
Euro: The Euro / USD opened at 1.2130 at the start of the European market on Friday. The European time fell sharply, the low was 1.2110. The initial short-term support of the exchange rate is at 1.2086 and the initial resistance can be seen at 1.2171.
British Pound: At the start of the European market on Friday, GBP / USD opened at 1.3275. During European time, it fell significantly, with the low reached at 1.3134, a drop of over 0.8% on the day. The initial short-term support of the exchange rate is at 1.3052 and the initial resistance can be seen at 1.3382.
Yen: In early European trading on Friday, USD / JPY opened at 104.06. European time has ups and downs, and is currently near 104.08. Initial short-term support for the exchange rate is at 104.04 and initial resistance can be seen at 104.50.
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