Everfx Weekly Market Review Dec 21-25

December 22, 2020
On Friday, the US Food and Drug Administration granted emergency use for a vaccine developed by Moderna.
Everfx Weekly Market Review Dec 21-25

Stock market

US stock market indices renewed their historical maximums last week on the background of the start of vaccinations in the US, expectations of a new economic stimulus package and due to the results of the Fed meeting.

Republican and Democratic leaders agreed on a $900 billion economic stimulus package, source NYTimes. The package includes $600 direct payments to taxpayers, additional $300 weekly payment to unemployment benefits, funds for small business loans, and vaccine transportation funding. The package is expected to be voted in the House of Representatives soon. Together with the package, it is planned to adopt a government spending bill for 1.4 trillion dollars.

On Wednesday, the results of the Fed meeting were announced, which boosted risky assets. The Fed hasn’t brought changes into monetary policy. The regulator has pledged to continue buying $120 billion of bonds monthly until signs of sustained economic growth emerge.

The Fed improved its macroeconomic forecasts. In 2020, GDP is expected to decline by 2.4% (the previous forecast was a decline of 6.5%), in 2021 – an increase of 4.2% is expected (the previous forecast was an increase of 4%). The unemployment rate in 2021 is projected at 4.5% (previous forecast – 5.5%).  Source Reuters

Currency market

The dollar index reached a new 2.5-year low after the announcement of the results of the Fed meeting. However, the dollar strengthened on Monday on rising demand for safe-haven assets amid news that a new strain of coronavirus has been identified in the UK and several other countries, 70% more infectious.

On Saturday, the UK government tightened lockdown restrictions in London and the southeast regions of England. A Tier 4 restrictions (close to those adopted in March) will cover a third of the UK population.

Several European countries, including France, Italy, the Netherlands and Belgium, have restricted transportation with the UK. Against this background, the pound exchange rate fell to a 10-day minimum. Lack of progress in negotiations on a trade agreement between the EU and the UK also exerts downward pressure on the pound.

Main events of the current week

On Tuesday, data on retail sales in Australia, UK and US GDP, consumer confidence index and existing home sales in the US will be presented.

On Wednesday, data on Canadian GDP, jobless claims and new home sales in the US, as well as crude oil inventories will be published.

US durable goods orders are due on Thursday.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.

Risk Warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved.

Categories: Education

visa mastercard paypal transfer skrill sofort giropay trustly

Open your EverFX account

It takes only a few minutes and even fewer clicks to enter the promising and exciting world of trading. Take the first step by clicking on the link below.
Trading involves significant risk of loss
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please consider our Risk Disclosure