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Can, road; road, can.

Deadlines are so old hat

Britain’s Prime Minister and the President of the European Commission decided on Sunday to “go the extra mile”, bypassing yesterday’s deadline in the hope that a post-Brexit trade deal can be agreed after further talks. No new deadline has been set, implying that 31 December is now the only one that matters.

Sterling gapped higher as trading began in the Far East this morning. Investors are apparently still ready to look on the bright side, imagining the negotiations to be driven by economic rationalism and the avoidance of self-harm. Rightly or wrongly, with that in mind, they were happy to mark sterling higher ahead of London's opening, such that it was the top performer over the weekend. Having taken last place on Thursday and after further punishment on Friday, the pound has done well to claw back its losses.

Relative to Friday morning, sterling is an average of 0.2% higher against the major currencies, having added a quarter of a euro cent and half a Swiss cent. The gains are all small and, in the case of the USD and JPY, almost invisible. For the week as a whole, sterling was the laggard, down by an average of 1.1%. Its smallest losses were of 0.7% to the USD and JPY.

 

Keep talking

Just as the protagonists in Europe have not abandoned their pursuit of a Brexit deal, so have the politicians in Washington – or at least some of them – continue to try for a new fiscal stimulus package. A cross-party group in Congress intends to reveal its plan today.

In the hope of easing the progress of that package, it will be split into two parts; one, the most controversial, will provide liability protection and financial support to state and local governments, while the other will cover the aspects that have general consensus, such as aid to small businesses. It will probably be added to the 12-bill omnibus budget legislation that must be passed by Friday to keep the government open.

On this side of the Atlantic, the focus is on Germany, where Chancellor Merkel is telling most shops and educational establishments to shut on Wednesday as a counter-Covid measure. The closures will last until at least 10 January. The government is trying to reduce the impact on the economy by the provision of €15 billion of support to businesses.

 

Not many numbers

During the London session, the only ecostats are for Eurozone industrial production. No central bankers are scheduled to appear.

In the Far East this morning, New Zealand reported a 96.8% annual decline in visitor arrivals in October, caused by the border closure. Business NZ’s performance of services index rose above its long term average to 55.4 in October.

Rightmove’s index showed asking prices for UK residential property falling 0.6% in December but still 6.6% higher than a year ago. Rightmove foresees another year of rising prices as housing needs outweigh economic uncertainty.

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