On Friday, British Prime Minister Johnson stated that Britain must be ready to leave the European Union without a deal. He said that unless the EU produces “basic changes”, the two sides will not be able to reach an agreement. Johnson said that he has clarified that Britain wants to reach a Canadian-style trade agreement with the EU, but judging from the EU summit, this is not feasible. “They want to control the UK in a way that is unacceptable for the UK.” Given that the summit seems to have ruled out the possibility of a Canadian-style agreement between the two sides, Johnson said that the UK should prepare for an Australian-style relationship with the EU. “Businesses and commercial transport companies should be prepared.” Johnson said that the summit showed that unless the EU’s approach is fundamentally changed, they will not give the UK what it wants. And the UK will prosper even if there is no agreement. Johnson emphasized that unless the EU changes its views, it will not continue negotiations with the EU. A reporter asked: “Do you want to withdraw from the negotiations?” Johnson replied that if there are basic changes, he is willing to listen, but the current position of the EU does not seem to have such a change. Johnson said that now is the time for the EU to compromise, and he refuses to admit that it has completely abandoned negotiations. He said that if the EU is willing to make changes, “we are very happy to talk about the practicality, social security issues, road transport, etc. I described.”
In addition, last week European Central Bank President Lagarde participated in an online debate on the global economy during the annual meeting of the International Monetary Fund/World Bank. She said that the European Central Bank will be prepared to take further emergency measures to deal with the economic impact of the epidemic crisis, and the region is currently facing a rapid increase in infection cases. Lagarde admitted: “At present we are still in a predicament and there is still a lot of work to be done, especially in Europe. We see the epidemic is spreading. The world may usher in a second wave of epidemics, which may hit Europe. What we can do is to take Appropriate policies to deal with related issues.” Lagarde added: “Many EU member states have considered increasing fiscal spending when presenting their budgets. Many of our existing tools can be used, from interest rates to forward-looking guidelines and asset purchase plans. We are all ready. We have done a lot, and if the situation worsens, then we will take the necessary actions.”
The data we need to pay attention to today are China’s third quarter GDP annual rate, Canada’s August wholesale sales monthly rate, and the United States’ October NAHB real estate market index.
Last Friday, the U.S. dollar index oscillated and consolidated. The daily line closed down slightly, and the spot exchange rate was trading near 93.70. In addition to profit-taking which has exerted certain pressure on the exchange rate, the retail sales data released by the United States during the time period performed better than market expectations, alleviating market tensions and cooling the dollar’s safe-haven buying demand is the main reason for the pressure on the dollar index to fall. . However, the serious situation of public health events in Europe and the United States and the renewed fear of a hard Brexit in the United Kingdom limits the room for correction of the exchange rate. Today, we are concerned about the pressure near 94.20, and the support below is near 93.20.
Last Friday, the euro was consolidating in shock, and the daily line closed up slightly, and the spot exchange rate was trading near 1.1720. In addition to short-covering and technical buying at the 1.1700 mark, which formed a certain degree of support for the exchange rate, the fall in the US dollar index is also an important factor supporting the rebound of the euro. In addition, the overall good performance of the economic data released by the Eurozone during the period also provided certain support to the exchange rate. However, concerns about public health events in the Eurozone and expectations of the European Central Bank’s expansion of easing measures limit the room for a rebound in the exchange rate. Pay attention to the pressure situation near 1.1800 today, and support below 1.1650.
Last Friday, the pound was consolidating in a shock, and the daily line closed up slightly, and the current exchange rate was trading at around 1.2940. In addition to short covering which constitutes a certain degree of support for the exchange rate, the weakening of the US dollar index under the pressure of profit-taking and risk aversion is also an important factor supporting the rebound of the pound. However, during the time, British Prime Minister Johnson stated that he has concluded that he should prepare for an Australian-style agreement. The rise in concerns about a hard Brexit in the UK limits the room for rebound in the exchange rate. Pay attention to the pressure situation near 1.3050 today, and support below 1.2850.