Yesterday, the US delivered unemployment claim numbers for the past week. Although the numbers are still high, comparing to pre-March readings, still there was a slight relief that the initial and continuing jobless claims came out below their initial forecasts. Trump vetoes the $740bln defence bill. Brexit deal in focus.
The Final Month Of Trump’s Presidency
Yesterday, the US delivered unemployment claim numbers for the past week. Although the numbers are still high, comparing to pre-March readings, still there was a slight relief that the initial and continuing jobless claims came out below their initial forecasts. The initial claims figure showed up at 803k, when the expectation was for a 885k one. The continuing jobless claims came out at 5337k, against the forecasted of 5558k. The US equities took a liking of that news in the beginning of their session, but slid before the close. The DJIA and the S&P 500 closed in positive territories, however Nasdaq 100, ended its sessions in the red.
Initially, investors kept their calm, when Trump showed his “disgrace” with the proposed aid bill, because the bill could not be vetoed by him. That said, although the President Trump wants to increase the aid amount from the initially proposed $600 to $2000, he knows that there are some lawmakers who are against a large increase of the pay-outs. If today the new proposed amendment will not pass, this may put the government in a possible shutdown. However, it seems that the aim of all this is exactly that and also to destabilize the situation, before Biden takes office on January 20th. Trump did mention recently, that if he won’t get the revised aid bill, then “next administration will have to deliver a Covid relief package and may be that administration will be me and we will get it done”. But surely, it is understood that he won’t remain in the Office for another term, and everything what we are seeing now is just a political game.
Another headline, which hit the wires yesterday, was that Trump had vetoed the $740bln defence bill. In a statement to Congress, Mr Trump wrote: “Unfortunately, the Act fails to include critical national security measures, includes provisions that fail to respect our veterans and our military’s history, and contradicts efforts by my administration to put America first in our national security and foreign policy actions”. This move may just put the whole US government closer to a potential temporary shutdown. If so, indices may take a slight U-turn in the southern direction on that news.
USD/JPY – Technical Outlook
USD/JPY is currently stuck between two of its short-term lines, an upside one drawn from the low of December 18th and a downside one taken from the high of December 10th. As long as the rate stays in between those two lines, we will remain neutral.
If the pair manages to overcome the aforementioned downside line and then climb above the 103.65 barrier, marked by the high of December 23rd, that may attract more buyers into the game. USD/JPY could travel to the 103.89 obstacle, a break of which might set the stage for a push to the 104.15 level, which is the high of December 15th.
Alternatively, if the previously discussed upside line breaks and the rate falls below yesterday’s low, at 103.35, that could invite a few more sellers into the arena, as such a move may increase the pair’s chances of sliding further. USD/JPY might fall to the 103.19 hurdle, which if fails to hold and breaks, may open the way to the current lowest point of December, at 102.87.
Port of Dover and Brexit
In regards to the news from Europe, tensions continued, in regards to the recent French boarder closure, which the brought the movement of trucks between France and Britain to a total collapse. Although yesterday France re-opened its boarders, in order to allow the logistical connection between the two countries, still, there were major delays in allowing the trucks out of UK. Clashes between drivers and the British police erupted near the port of Dover. Truck drivers are told by the British authorities that a rapid-test for COVID-19 is required, in order to leave the country. If they fail to comply, then the drivers could be refused entry onto ships and Eurostar trains.
But one of the main announcements, which is awaited today, is the confirmation of the Brexit trade deal. Most likely the two sides will announce it as their own victory in a long-fought battle. The British pound might strengthen on the news, however, any small negative remark on the deal from any high-ranked official, may bring GBP back down against its main counterparts.
GBP/AUD – Technical Outlook
Looking at the technical picture of GBP/AUD on our 4-hour chart, we can see that it continues to balance above a short-term tentative upside support line taken from the low of December 11th. Although this suggests that the current short-term trend is to the upside, in order to get excited with further upside, a break of the 1.7905 barrier would be needed. Until then, we will remain somewhat positive.
If, eventually, the rate manages to pop and stay above the 1.7905 barrier, marked by the high of December 16th, that would confirm a forthcoming higher high, potentially clearing the way to some higher areas. GBP/AUD might then travel to the 1.8046 zone, or even to the 1.18117 hurdle, which is marked by an intraday swing low of December 4th.
On the other hand, if the pair suddenly falls heavily and ends up breaking the aforementioned upside line, this may invite more bears into the field, especially if the rate drops below the 1.7685 zone, marked by the low of December 22nd. GBP/AUD could then travel to the current low of this week, at 1.7589, a break of which might clear the way to the 1.7502 level, marked by an intraday swing low of December 11th.
As For The Rest Of Today’s Events
Most of the major EU bourses are closed due to the Christmas Eve celebration. However, UK, Spain, US and Canada bourses are open, but only for a half day. No major economic data releases are expected today.
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