US Futures Steady, European Stocks Inch Higher

18 Dec 2020 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • Relief package bill enactment required before Friday midnight
  • Euro retains its recent highs

US equity futures are keeping steady on Friday. following a record day for the S&P 500 as market participants monitor the Covid-19 situation, subpar US economic data, and the prospects for a coronavirus relief package. US lawmakers are close to reaching an agreement on a fiscal stimulus worth over $900bn that would send direct payments to Americans. In addition to providing an extension to unemployment benefits and funding to small businesses.

Unemployment Claims and Relief Bill

Unemployment claims for pandemic programs are spiking. This comes just a little more than a week before the programs expire on Dec 26. For the past two weeks, over 1 million claims for unemployment benefits have been registered by people waiting to receive unemployment aid.

The relief bill crafted by Congressional leaders and anticipated by the Americans is likely to include unemployment benefits. They are expected to be similar to those in the previous round in March when the first Covid-19 aid package disbursed up to $1,200 per adult. On Thursday, the Labor Department’s figures showed a three-month high of 885,000 initial jobless claims. Thus, 85,000 more than the expected number.

Additionally, Congress also has the challenging task to pass a new spending bill by Friday midnight to avoid a government shutdown. Lawmakers could opt for a short-term extension of government funding as a way to secure more time needed to strike a deal.

Investors Retain a Positive Outlook

Across the currency markets, the Euro is keeping near its recent highs against the US dollar. As the pair is taking a breather from the events that took place this week. While investors remain optimistic about the prospects of the fiscal stimulus and the market is not rushing to hold US dollars. The Great British pound is also keeping firm against most counterparts.

The GBP/USD remains heavily bid as the Brexit negotiations are in the final hours of a possible deal. Chief EU negotiator Michel Barnier warned earlier on Friday that the two sides have reached the “moment of truth”. So these last hours will determine the outcome.

Brexit Talks Final Hours

The main sticking point remains the issue of EU access to UK fishing waters. Mr. Barnier warned Prime Minister Boris Johnson that the UK will have to settle for limited access to the single market if it wants to retain a larger portion of its fishing waters. Not willing to change the stance on fishing rights, the EU has collided with Boris Johnson’s position. Therefore, they said on Thursday that the only way to continue the negotiations would be if the bloc changed its demands on the fishing front. Negotiations continue Friday in Brussels.

European Stocks Amid Covid Surge

European stocks struggle for a direction on Friday. As investors are monitoring the coronavirus vaccine roll out and the latest economic data. Across Europe, coronavirus cases continue to surge.

Over the last week, the UK registered an increase in infections. While Spain is planning to impose harsher restrictions to curb the spread of the virus. Hungary is set to start administering a Covid-19 vaccine from Dec 27. The central European country has secured its first 35,000 vaccines. One of the priorities on the list will be healthcare workers.

Heading into the weekend, traders and investors will be following the topics of the highest interest. Mainly the Brexit trade talks and the US stimulus package negotiations. Both can be decided by Monday.

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