The economic calendar may be barren in the run up to the New Year, but Brexit and covid-19 drama could still cause fireworks.
UK
At the time of writing, it is still unclear whether the UK will be entering 2021 with a Brexit deal in place or not. It’s the big question that has hovered over the country since 2016, and will finally come to a head this week.
On top of that, there is the ‘new strain’ of coronavirus spreading across London and the south east – the progression of this mutation will be closely watched by investors, as it will likely inform the scale and severity of the UK’s inevitable post-Christmas lockdown.
Beyond those headline grabbers, there’s not much else for the markets to get their teeth into during the lull between the holidays and New Year.
US
The Dow Jones and the rest of the US markets are in limbo. We are now firmly the other side of the election, vaccine approvals and the long-needed (if insufficient) stimulus bill, but still some weeks away from the inauguration of Joe Biden.
The next big event isn’t until January 5th, when there is a pair of run-off Senate elections in Georgia. The results of these two votes are almost more important than the national election, given that the winners will define how the Biden administration can govern. And for the markets, that means the size of the next stimulus package.
In terms of data, the US has the goods trade balance, Chicago PMI and pending home sales on Wednesday, followed by the usual jobless claims number on Thursday.
Eurozone
The Eurozone is the quietest region this week, thanks to multiple Bank Holidays. However, the DAX, euro et al. could still see notable movements due to the unanswered questions over Brexit and covid.
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