Risk rally comes to an abrupt end (Daily analysis 21.12.2020)

21 Dec 2020 9:04|Conotoxia.com

The Brexit deal is still in the making. With less than two weeks to the year-end, the fishery remains the main obstacle to strike the deal between the EU and the United Kingdom.

Consequently, the pound experiences the strongest sell-off in a risk rout triggered by the discovery of a new COVID-19 variant and introduction of new restrictions in Europe.

Risk assets and currencies start the week on the back foot. The EUR/USD pair drops below 1.22 mark. The GBP/USD exchange rate sinks almost 2% and trades below the 1.33 handle. The Norwegian krone and Russian ruble sell off as oil benchmarks decline over 3% due to new curbs on mobility.

Equity markets sharply turn lower as well. In the EM space, the Polish zloty is fragile as it was on Friday, the local central bank decided to intervene on the market to stop the zloty’s advance in a shocking move. The EUR/PLN pair skyrocketed above 4.50.

Risk markets gain no relief from headlines pointing to immediate ratification of a long-discussed fiscal deal. Nonetheless, the US assets should prove to be more resilient in the face of a new wave of turbulence.

Conotoxia research team


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This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.

See also:

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The greenback falls off the cliff (Daily analysis 17.12.2020)

16 Dec 2020 10:33

U.S. dollar sell-off gains traction again (Daily analysis 16.12.2020)

15 Dec 2020 12:22

The Australian dollar hit by trade tensions (Daily analysis 15.12.2020)

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