The $892 billion virus relief bill that was approved by the US Congress has just met some headwinds. President Trump has refused to sign the bill and demands for $2000 payments  instead of $600 aid cheques negotiated by the congressional leaders. The Speaker of the House of Representatives Nancy Pelosi is reportedly eager to provide $2000 cheques which means the pressure will be on the Senate Majority leader Mitch McConnell who is opposed to the expansion of the aid package. This latest twist means the bill that has been negotiated for over half a year will be delayed further. The additional delay just before Christmas is certainly bad news for families without money and banking on government support coming soon. Should the delay be extended, the funding of the US government is also threatened. Without a deal signed by the President, the government will shut down on December 29th. US stocks have stayed weak since our last published analysis on S&P 500 (here). EURUSD rallied a bit yesterday but wasn’t able to break resistances remained weak for the rest of the day just as we expected. Gold also traded lower after some volatility on Monday after the news that the bill was made between the congressional leaders. This disappointment has brought gold near to support levels.

Our next report will be published on January 4th 2021 as we will take a Christmas break. The economic calendar is very light with Christmas approaching. Canadian GDP release is due today. See our economic calendar for times and details. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

We expected higher than average volatility and weakness in EURUSD yesterday. The only rally of the day was quickly sold and the pair collapsed to levels near the previous day’s low. Key resistance levels are at 1.2257 and 1.2271. Key support levels can be found at 1.2105, 1.2121, 1.2129 and 1.2152. Yesterday’s low (1.2152) coincides with a channel low and is therefore important. Price has bounced higher from the level and there is upside momentum in intraday timeframes. Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts. 

GBPUSD created another higher low yesterday after the pair has been swinging wildly. Volatility is created by Brexit negotiations failing again and again to produce a deal both parties are happy with. Intraday momentum is higher in Cable today and the key support and resistance levels for pair are 1.3134, 1.31880, 1.3303, 1.3500 and 1.36220. There are no signs of significant progress in the negotiations but the UK housing secretary, Robert Jenrick says he is still reasonably optimistic. At the same time, it is reported that the EU does not have much room to negotiate on fishing rights. All in all, this boils down to the fact that the only reliable facts for traders are all related to price action. Trade what you see, not what you anticipate the negotiators could or could not do. Anything’s possible and the only reliable approach is to follow the price and trade according to your strategy. Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts. 

Recent macroeconomic data releases

BOE MPC Official Bank Rate Votes 0-0-9, 0-0-9 expected
BOE Official Bank Rate 0.10%, 0.10% expected
BOE Asset Purchase Facility Votes 0-0-9, 0-0-9 expected
Canadian ADP Non-Farm Employment Change 40.8K 
US Philly Fed Manufacturing Index 11.1, 20.1 expected
US Unemployment Claims 885K, 817K expected
UK Retail Sales -3.8%, -.4.0% expected
German IFO Business Climate 92.1, 90.2 expected
Canadian Core Retail Sales 0.0%, 0.1% expected
Canadian Retail Sales 0.4, 0.1% expected
US Final GDP 33.4%, 33.1% expected

Important macroeconomic data releases this week

Canadian GDP 0.8% previous

You may access the times and dates in the economic calendar here.

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Janne Muta
Chief Market Analyst

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