MARKET NEWS AND CHARTS FOR DECEMBER 22, 2020

USDJPY

The US economy expanded by 33.4% on the final reading of the third quarter GDP report for fiscal 2020. The impressive performance of the world’s largest economy had eclipsed the second quarter’s decline of -31.4% in Q2. A big part of the upbeat economic data was due to higher corporate earnings which grew by 27.0%, a big jump from the prior report’s -10.7% drop. On the same day, however, the US Congress had passed the much-anticipated stimulus bill worth $900 billion. A big chunk of the economic aid will go to individuals affected by the pandemic through a check worth $600.00. While the stimulus will support the local economy’s recovery from the financial impact of COVID-19, it will send the US dollar lower against the Japanese yen. The bill is only waiting for the signature of US President Donald Trump before it becomes a law. The USDJPY pair will drop towards September 2016’s low.

USDJPY

NZDCAD

Canada had a disappointing result on Friday, December 18. The country’s retail sales report has slowed down to 0.4% for the month of October compared to the prior month’s 1.1% growth. Meanwhile, the core retail sales report was flat in the same month. The figures led to pessimism among investors that Canada might see a negative growth on the upcoming reports, dragging its gross domestic product (GDP). Aside from this, Canada’s deficit continues to grow. The government spent 18.51 billion below the budget in October. This put the total budget deficit in the past 12 trailing months at 216.62 billion. In Monday’s report, the New Housing Price Index in November only grew by 0.6% compared to the prior month’s 0.8%. Meanwhile, credit card spending in New Zealand posted a better-than-expected result at -5.6% compared to last month’s report of -6.0% decline. NZDCAD is headed towards the 0.94000 resistance area.

NZDCAD

GBPUSD

The GDP growth in the UK for Q3 2020 was 16.0% compared to the last quarter’s decline of -19.8%. On the other hand, the US economy expanded by 33.4% from the last quarter’s -31.4% drop. Based on the figures published on Tuesday, December 22, Britain had a better gross domestic product result. However, the fears of a new COVID-19 strain in the country is threatening to derail its recovery from the pandemic. A new variant of coronavirus has emerged, and experts believe that the mutated virus is 70% more contagious than the old variant. More than 40 countries have already banned flight from and to the United Kingdom. In addition to this, the UK and the EU are yet to reach an agreement of their post-Brexit relationship. However, the news that the Federal Reserve has allowed stock buybacks by banks in the US could offset the greenback’s advantage against the pound. The buyback will make US equities more attractive to investors.

GBPUSD

EURCAD

The new variant of COVID-19 in the United Kingdom has resulted in a second lockdown in the European continent. This could be a problem for Germany and France as the EU’s two (2) economic powerhouses struggle recovering from the pandemic. France has the largest coronavirus cases in Europe at 2.51 million. Meanwhile, Germany had entered a third lockdown following the resurgence of the deadly virus in the country prior to the new strain. If the mutated virus has reached their territories, investors should expect a further decline in the French and German economy. As for Germany, this could lead to another recession from Q4 of fiscal 2020 to the first quarter of the following year. GfK Consumer Climate on Tuesday’s report, December 22, decreased to -7.3 points for the month of January against the previous result of -6.8%. As for Canada, recent reports show the country slowing down in the fourth quarter.

EURCAD

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