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Tradingview Weekly Market Wrap 14 December 2020

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One of the most important events of the last week was Vaccines and Related Biological Products Advisory Committee Meeting where FDA gave green light to the Pfizer vaccine. Long story short, the U.S. Food and Drug Administration has informed the sponsor that it will rapidly work toward finalization and issuance of an emergency use authorization. Health care workers and nursing home residents will have the first priority.

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It is worth mentioning that the Pfizer vaccine has already been given to people in Bahrain and Britain and Canada approved it this week. The EMA, on the other hand, has promised to reach a decision on conditional approval for Pfizer/BioNTech’s vaccine by December 29. The only problem is that the Pfizer vaccine may cause serious allergic reactions in people with a history of anaphylactic allergic reactions to medicines and foods. Additionally, it looks like the FDA is being pressured by the Trump administration. “We are just days away from authorization from the F.D.A. and we’re pushing them hard,” Mr. Trump said at the event.

Amid the second wave of the pandemic, US unemployment claims once again hit record levels since mid-September with another 853,000 Americans filing for first-time unemployment benefits last week on a seasonally adjusted basis. Not adjusting for seasonality, initial claims stood at nearly 950,000. Thus, we could say that the US labor market has begun to weaken. Clearly, a failure to accept an additional stimulus package has led to layoffs. Having said this, the decision-making process on the bill could speed up, and the falling US dollar, together with growing prices on metal prices, prove these assumptions.

Talking about the Brexit saga, UK Prime Minister Johnson and EC President von der Leyen has a dinner but the only conclusion they have apparently come to is that the food good as the dispute still hasn’t been resolved, or we simply don’t know all the details.  Once again it has been decided to extend talks through the weekend. The main issues to resolve to remain fishing rights, governance, and fair competition. Meanwhile, we receive news like “The Royal Navy Police will be given the power to arrest French and other EU fishermen who illegally enter Britain’s waters in the event of a no-deal Brexit.”

Another important news was the boost by the ECB of its COVID-19 stimulus package by $606 billion and the extension of its bond-buying program by another nine months. Thus, the QE will continue until at least March 2022. The expansion of QE could be explained by deflationary pressure on the economy, a sharp drop in business activity, and the strengthening of the euro. It should be said that the expensive euro reduces the competitiveness of European goods.

Meanwhile, the ECB has downgraded forecasts for eurozone growth next year, as a result of the second wave of Covid-19. Thus, GDP is now expected to grow by just 3.9% in 2021, compared with a forecast of 5% made in September. GDP growth in 2020 will be of -7.3% compared to -8% since September, GDP growth in 2022 is forecasted to be 4.2% compared to 3.2% since September.

Next week will be the last week of the year. The most important events will be Policy meetings by the Bank of Japan and the FOMC, as well as the preliminary December PMI readings.

 

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