1. Hard Brexit Fears Keep the Sterling Subdued
European stocks started the day on a bearish note on Wednesday following U.K. Prime Minister Boris Johnson’s vow to block an extension of EU trade talks beyond 2020, which has, in turn, revived fears of a hard Brexit. Johnson set a hard deadline of December 2020 to reach a new trade deal with the EU, with the U.K. set to leave the bloc by January 31st. UK shares received a push from S&P and Fitch ratings after the win of Boris Johnson, however, this did not really help stop the pound’s decline. GBP/USD wallowed at a one-month low today, trading near the 1.3100 range.
2. Trump Impeachment in Focus
In the US today, the House will likely vote to approve the impeachment process against President Trump, who is expected to defend himself. The chamber charges the president with abuse of power and obstruction of Congress, stemming from his alleged efforts to get Ukraine to investigate a top political rival, former Vice President Joe Biden, and his son Hunter. The Democratic-held chamber is expected to impeach while the Senate then plans to hold a trial in January.
3. Forex Preview: USD Reigns
Meanwhile, the USD keeps slowly crawling up despite the US President repeatedly stating that US interest rates should be lowered by the Fed. The greenback remains supported by hopes of a U.S. China trade deal while other currencies continue to slide on fears of an oncoming recession. The GBP is plummeting fast on the prospect of a hard Brexit and as Brussels says that Johnson’s timetable was “rigid” and likely to limit the scope of any deal. Elsewhere, the kiwi was knocked by an unexpectedly steep drop in dairy prices, the top national export, pushing the currency below the $0.6560 level early this morning. The AUD also held near a week low after the Reserve Bank of Australia foreshadowed possible easing in February.
4. Avon, Boeing and FedEx Edge Lower
FedEx and Boeing continued on their downtrend yesterday after a disappointing profit cuts forecast and a further halt of production of planes in January. Elsewhere, AVP closed 4.5% lower on Tuesday after the company announced that it would bring an end to its signature door-to-door sales model in China as the cosmetic conglomerate’s e-commerce profits continue to grow.
5. Gold to Break Higher?
Gold prices were little changed on Wednesday holding near the $1,477 range positive economic data out of the United States kept the dollar supported and decreased demand for the dollar-denominated metal. We could see XAU/USD breaking higher as we get more updates on Trump’s impeachment and as the Brexit saga continues to spread risk aversion in the markets.
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CNBC Dec 18, 2019 2:48 AM ET
Investing Dec 18, 2019 7:33 AM ET
Bloomberg Dec 18, 2019 6:45 AM ET
Reuters Dec 18, 2019 05:58 AM ET