Stepping back

It is not just Megan and Harry that are stepping back it seems, the US and Iran also appear to be stepping back from the brink (if that indeed is what it was), with President Trump noting that Iran looks to be ‘standing down’ and the latter’s foreign minister saying, following yesterday’s retaliatory strikes, that it would only act again if the US acts. In any case, the apparent de-escalation of tensions has contributed to a fall in oil prices, a rebound in equities as well as higher yields in core bond markets, though the dollar is firmer against both the euro and the pound trading at $1.11 and $1.31 respectively (it had strengthened initially after the escalation in tensions at the end of last week)

The dollar is being supported by positive economic data out of the US, including an increase in the ISM index of non-manufacturing activity in December and solid growth in private sector employment last month (an increase of over 200k from November) according to the ADP report published yesterday

Boris Johnson, following his meeting with the European Commission President, Ursula von der Leyen, has reiterated that the UK would not extend the transition beyond 31 December 2020 and is ready to start negotiations on a Canada-style Free Trade Agreement (FTA) as soon as possible (such a new trading relationship would be at the harder end of the Brexit spectrum)

Data due include the unemployment rate in the Euro area and jobless claims in the US, while a whole host of central bankers (from the Fed, ECB and BOE) are scheduled to deliver speeches over the course of today