Daily Alert – Friday 4th December 2020: GBP whipsawed by trade deal talk

Mark NugentDaily Alert, Dec 2020

Daily Alert – Friday 4th December 2020: GBP whipsawed by trade deal talk

The Brexit trade deal talks have been buffeted by chit-chat coming from both sides. Today, the UK said the EU have brought new demands and that previously agreed elements have fallen apart. Macron threatens a veto if Barnier caves in. Strange this, as the French are usually so supportive of us Brits. Merkel urges compromise. The GBP whipsawed all week but looks like it will end up on the week.

Risk sentiment has been volatile. Monday was risk-off for no particular reason before turning more positive as a bipartisan US Senate group made a new Covid-19 relief proposal. It seems to still be alive as the week draws to a close. Wednesday and Thursday were indecisive before returning to risk-on today, despite the miss on non-farm payroll in the US. Any negative effects of the miss have been mitigated by a better-than-expected unemployment rate.

The JPY did not track sentiment well on Monday, Wednesday, and Thursday. The inverse correlation between the JPY and the commodity currencies only held true with the CAD. The USD dropped significantly over the week as the FOMC said it was mulling mulls additional easing prior to an announcement at the 16th December meeting. The EUR hit a 30-month high on the weekly chart and a just a little more will see it hit a six-and-a-half year high.

WTI is “V” shaped on the week (down and then up), currently very close to where it started as post-Covid-19 recovery hopes mount and yesterday’s OPEC+ decision to extend the current production cut of 7.7m bpd beyond January at a slightly reduced rate of 7.2m bpd. This continued constraint of supply is clearly bullish for oil, despite most media framing the agreement as less of a cut because 7.2m is less than 7.7m.

GOLD has rallied from the 50MA after recent falls. If it is following risk sentiment or the USD it is hard to tell.

It is not often I leave equities to last. US, European, Japanese, and Australian indices have barely moved over the week.

Trade of the week (from the Sunday open to 1630 GMT on Friday) was EURJPY long but you would have needed a crystal ball to trade the entire move. I got in on Tuesday night, closed half the trade on Wednesday night for around 2x risk. Current pricing should give around 2x risk on the remainder. I will close this tonight and make a video for you on Monday.

November saw a return of 9.1% from 7 trades: 5 winners, 1 loser and 1 breakeven. YTD performance is a gain of +222.8%. This is unprecedented. The November and YTD Performance Report is available for all on the MyTradingMentor website and VIP Club members can find it there too and in the members area.

I’ll be back on Monday.

The VIP Club members area is HERE