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Collinson FX: December 24, 2019 - Santa Claus rally underway in US

by Collinson FX 23 Dec 2019 23:55 PST 24 December 2019
Charlotte Dobsob and Saskia Tidey (GBR) winners of the Medal Race - 49er FX - Hyunsai Worlds - December 2019 © Richard Gladwell / Sail-World.com

Collinson FX: December 24, 2019 - Santa Claus rally underway

US equity markets charged into the ‘Santa Claus Rally’, spurred on by the growing global trade prospects, as China announce reduced tariffs on more than 850 imports. The ‘Phase One’ trade agreement has been cited and now President Trump looks likely to welcome the newly re-elected UK PM Boris Johnson, with a ‘Super Trade Agreement’ in the offing. Global trade has boosted an already booming US economy and this is likely to spread across the integrated markets. The tortured Brexit is to be completed early in the new year, but a trade agreement is yet to be finalised, raising fears of a ‘no deal’ which has spooked the GBP traders. The GBP rallied to above 1.3400, in the wake of the Conservatives victory in the ‘Brexit’ election, but the recent controversy has pushed the GBP back below 1.3000. The EUR suffers in communion, falling back to 1.1080, but long term fortunes are likely to be even more troubled.

The global trade scenario is feeding the trade exposed, commodity currencies. The AUD has pushed up to 0.6915, while the NZD is trading 0.6625, both enhanced by the trade developments and the Chinese supply chain. Markets in the US close at lunch time on Xmas eve, so the promise of a massive rally into the close of the 2019 year, is likely.

Collinson FX: December 23, 2019 - US markets close on record highs

US equity markets closed the week, breaking further record highs. President Trump tweeted he had ‘a very good talk with President Xi’, confirming the ‘Phase One’ trade agreement was already under way and that progress was being made on Hong Kong! Markets blasted into yet more record highs confirming the ‘Santa Rally’. In the UK, the newly re-elected PM Boris Johnson tested his new massive majority in the British Parliament, passing legislation for Brexit. The GBP remains under pressure, trading 1.3030, as negotiations with the EU over Brexit and a trade deal enter unsettled territory, while the EUR fell to 1.1070.

Commodity currencies have gained from progress on global trade and improving local economic data. The AUD is now testing 0.6900, while the NZD attempts to regain 0.6600, as economic sentiment improves. The US/China trade deal settles existing supply chains, while the mouth watering prospects of UK trade deals with Australia and NZ, bring exciting prospects for the coming year.

Christmas week will see much reduced trading volumes, as the world celebrates the holiday season. The ‘Santa Rally’ is ‘icing on the cake’ for equity markets and the coming week will be one of positive reflection and speculation for what 2020 holds!?

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