Stimulus Deal Hopes Help Equities Higher; Will BOC Help The Loonie?

Market Driver Dec. 9, 2020

  • Brexit goes to dinner
  • Equities rise on stimulus deal hopes
  • 1.33% 0.79%
  • UST 10Y 0.93
  • Oil $46
  • Gold $1860/oz.
  • $18020/oz.

US

Stock index futures were slightly higher with the “Main Street” indices of and outperforming the on hopes of a stimulus deal during the current lame-duck session of Congress.

Markets were up about 30 basis points as optimism reigned, although the two parties still remained apart on the key provision of liability protection and it was far from certain that any deal would be done.

In the never-ending Brexit saga Boris Johnson and EU President Ursula von der Layen are scheduled for a dinner meeting with investors hoping that the two could work out the final differences that separate them.

Yesterday, there was a burst of optimism that the two parties may have come to terms on what is known as the Internal Market Bill that would have created a different regulatory regime for Northern Ireland. The UK government agreed to drop parts of legislation that could have been seen as breaking international law.

Still, the two sides remain apart on the issue of fisheries and regulatory arbitrage and it is far from clear if PM Johnson and President Von der Layen will be able to come to terms tonight.
traders however remained optimistic with sterling rising nearly 100 pips to 1,3448.

In North America the economic calendar is barren, but FX traders will keep an eye on the Bank of Canada which holds its monthly policy meeting. The consensus view is for no change with the central bank maintaining its accommodative stance, but traders will be keen to hear Governor Macklem’s read of the Canadian economy. If the BOC chief sounds upbeat after last week’s surprisingly strong employment data the could strengthen further perhaps testing the 1.2700 figure, especially if news on stimulus from this side of the border turns positive as well.

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