Markets on a whole were quiet as the current Brexit and stimulus package deals remained elusive.

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Strong prospects for a stimulus package remained in Washington DC, but no firm deal was made as lawmakers continued negotiations. Alternatively, new obstacles focused on fishing rights have arisen in the Brexit deal currently being hashed out in Brussels. Anxious official comments impacted the pound in morning London, dealing with the pair testing the 1.3500 level before bouncing slightly.

 

Belief that both parts will eventually arrive at a deal has influenced the overall sentiment, which remains positive. Both stories are key drivers of risk on moves, and the week-long rallies in both high beta FX and equities have continued under the assumption that the stimulus package and Brexit are definite deals.

For the moment that remains operating principle and the likely outcome for both, given the enormous stakes in each deal. However, due to price action being so biased to the upside and positioning clearly stretched, we certainly have scope for a correction into the year end. Both FX and equities could see a "sell the news" reaction, so the risk remains to downside.

 

With the third wave of cases, of which the United States has seen over 200,000 new cases and an average of over 3,000 deaths over the last ten days, public health departments are avidly searching for strategies to prevent or at least reduce the virus spreading rapidly. 

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The U.S. Food and Drug Administration has approved a number of several rapid antigen tests for emergency use. Nonetheless, according to the Arizona Department of Health Services and a group of scientists from the CDC's Covid-19 Response Team, data showed the test performance in asymptomatic people to be lacking.

Apart from Canadian retail sales, today's eco calendar is virtually empty. The focus will be placed on DC headlines and the quadruple expiration in equity and derivative markets following Tesla's addition the S&P. The stock's volatility and size could possibly trigger many price insensitive moves, thus exacerbating the action as the week closes.

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