APAC Morning Update - 10 Dec 2020

Currency markets are in take profit mode this morning after the long run higher against the US Dollar. US shares are also dropping sharply as people start to have doubts about the size and timing of the next US Stimulus Bill being passed. Gold and silver are also falling sharply as the profit taking spreads across all asset classes.

You could argue that this uncertainty has been there all along, but as things go in the financial world everything is fine right up the point that they are not. The big question is how big the sell-off is going to be. Over the last few months the share market sell-offs have been about 10% and this has led to about a 5% decline in the currencies. So if the selling continues we could see the NZDUSD back in the low 0.6800 area before too long.

No news yet on the Brexit deal. Talks will resume today our time but the clock is ticking with the exit date of December 31st fast approaching. To say it looks like it will be a mess is a massive understatement. We expect considerable volatility in the Pound and those with Pound exposure should be looking to manage their risk sooner rather than later.

Overnight we have the EU main refinancing rate, which is about as hard to guess as the RBA. Perhaps more interestingly we have US CPI. Very early days of course but inflation is the one thing that could very quickly change the narrative of free money forever.

Global equity are mixed: Dow -0.4%, S&P 500 -0.9%, FTSE +0.1%, DAX +0.5%, CAC -0.3%, Nikkei +1.3%, Shanghai -1.1%.

Gold prices are off 2.3%, currently trading at $1,829 an ounce. WTI Crude Oil prices are off -0.1%, trading at $45.59 a barrel.