Equity Markets flat
Cable slightly higher on Brexit talks progress
Nikkei -0.42% Dax 0.19%
UST 10Y 0.83
Oil $42.0
Gold $1867/oz.
BTCUSD $18243/oz.

Asia and the EU
EUR Industrial Sales -3.2%

US
CAD Retail Sales 8:30

It’s been a very quiet night of trade with equity markets essentially flat and currencies as well as investors played a tug of war between the worsening COVID statistics and the encouraging news on the vaccine front.

US Health Secretary Alex Azar noted that Pfizer and BioNTech are expected to file an emergency use authorization on Friday indicating approval is progressing quickly as governments rush to put the vaccine in production.

Meanwhile, COVID cases continue to rise markedly with the US reporting its highest daily reading ever at 185,000 cases and nearly 2,000 deaths. The strains from COVID are hitting medical systems in the Midwest and it is almost certain that mobility is down and will likely remain that through the holiday shopping season. That will be positive for digital retailers but may be the death knell for many small to medium-sized brick and mortar stores and will likely create further contractionary ripples in the economy in Q4.

Still, the markets remain buoyed by the prospect of vaccines and the renewed opening of negotiations between Democrats and Republicans regarding the fiscal stimulus bill, although the chances are minuscule that any deal will be done before the new Administration takes hold in January.

If FX the action was subdued as well but cable was slightly higher on the prospects of a Brexit deal as negotiators have nailed down the differences to three points – fishing rights, fair competition, and dispute resolution mechanism. Of the three the latter may be the most difficult to achieve as the UK is going to be very resistant to cede authority to an external party over matters of trade policy. For that reason, the possibility of a hard Brexit still exists and that is certainly not priced into the pair at the moment.

In North America, the calendar is barren and headline risk will drive trade. After yesterday’s rally driven by hopes of stimulus investors could pause and reverse if there is no hint of progress and the temptation to book profits ahead of the holiday week will be strong.