EURUSD
2020 has been the most challenging and difficult year, though last week finally saw a Brexit agreement as the European Union and the UK reached an agreement on their new trade relationship in the post-Brexit era at the end of a painstaking process that has lasted 4 years.. Until the last minute, it was unclear whether Britain would leave the bloc without a deal. Both London and Brussels have focused on deepening trade relations with other countries; Britain hopes to sign a free trade agreement with the US, while Europe already signed such a deal with Japan in 2019.
The European Union has also explored relations with China, the world’s second largest economy. The enormous Chinese market is a draw for Europeans, given the trade friction with the Trump administration. With President-Elect Biden expected to forge closer ties with China, the European Union is racing to make a deal with China that will give European businesses preferential treatment over US companies. To this end, the EU is close to signing an investment deal with China. The deal will open up opportunities for greater investment by EU companies in China and will provide momentum for the parties to move towards forming a free trade agreement, rumours are swirling of an announcement within the week.
The Euro has posted a modest gain in Tuesday’s session. Currently, EURUSD is trading at 1.2260. A short week with a very light data calendar and a holiday for many banks, with no eurozone releases and limited US data leaves the market vulnerable to a backlash driven by headlines in this highly illiquid period of the year for financial markets.
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Ady Phangestu
Analyst – HF Indonesia
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