Weekly Market Outlook: Vaccine approval, Brexit negotiations and more

December 14, 2020 14:30

Three decisive news items are expected to direct the course of the market throughout this week, as we head towards the Christmas holidays:

  • The FDA's approval to start the vaccination process in the US after the Pfizer vaccine was approved
  • The continuation of post-Brexit trade negotiations between the UK and the European Union
  • The meeting of the Federal Reserve

The Vaccination Process Commences in the US

Following the FDA's approval of the Pfizer vaccine on Sunday, the United States has followed in the footsteps of the UK and other countries in taking a major step forward in the ongoing fight against the coronavirus pandemic.

Few countries have been ravaged by the pandemic to the extent of the US, which last week set a record of 234,000 new recorded infections in 24 hours, surpassing a total of 16 million total recorded cases and 302,762 deaths since the pandemic began.

The vaccination rollout has been approved in principle as an emergency measure for people over 16 years of age with a total of 2.9 million doses ready for distribution.

Brexit Trade Negotiations to Continue

Last week was a critical week for trade negotiations between the EU and the UK. Sunday had been agreed by both sides as a deadline for reaching an agreement between London and Brussels.

But once again, as Europe waited in anticipation of a decisive announcement, an extension to the negotiations was announced in an attempt to reach an agreement. Boris Johnson and Ursula Von der Leyen agreed to the extension by telephone on Sunday afternoon, proving, if it was not already clear, that both parties view an agreement as vital, despite their respective positions seeming far apart from an outside perspective.

Ever since the UK's referendum on membership of the EU in June 2016, the story of Brexit seems to be one which is never ending and less than one month now remains until the transitional period between the two parties comes to an end.

Last week saw important steps taken, after the British Prime Minister announced the withdrawal of certain controversial clauses within the Internal Market Act, which were in direct contravention of the withdrawal agreement reached last January with the EU regarding the Irish border.

This new extension will give some breathing space to the financial markets which were rife with uncertainty last week. However, until an agreement is reached, this uncertainty will continue to grow as the chances of a no deal Brexit seem to grow by the day. Countries such as France, Belgium, the Netherlands and Denmark have made it clear that they would prefer no agreement rather than Europe granting too many concessions to the UK.

The Spotlight Shifts to the Federal Reserve

Last week the President of the European Central Bank, Christine Lagarde, took another step in her plan of doing "whatever it takes" by breathing fresh life into her monetary stimulus program. It is now the turn of the US Federal Reserve to take the reins and assess the possibility of introducing new measures with regards to monetary policy.

The latest employment data and the situation regarding the pandemic are not at all promising, as the Non-Farm Payroll data from November showed a weakening in the labour market, where unemployment continues to grow.

It will be important to see what decisions are made, as the $908 billion stimulus package designed to combat the effects of the pandemic remains stalled in negotiations.

As well as these three key points above, attention must be paid to other events in the economic calendar.

Source: Admiral Markets Forex Economic Calendar

The Market Situation

Last week the major global indices closed with slight weekly declines. The DAX30 and the SP500 dropped back to their first support level at their 18 session average.

It is important to look at the behaviour of both indices and see if they are able to bounce off this level and look for support to take a new upward momentum.

The loss of these levels could deepen the reversals after the November and early December rises that led to overbought levels in the Stochastic Indicator, so this distribution process could be positive. These reversals could be interpreted as possible entry points for a possible Christmas rally, provided they do not lose their main support levels (moving average of 200 sessions in red). Although for this to happen, the DAX30 will need to break out of its current green resistance level.

Source: Admiral Markets MetaTrader 5 - DAX30 Daily Chart. Date Range: September 9, 2019, to December 11, 2020. Date Captured: December 11, 2020. Past performance is not necessarily an indication of future performance.

Source: Admiral Markets MetaTrader 5 - SP500 Daily Chart. Date Range: September 9, 2019, to December 14, 2020. Date Captured: December 14, 2020. Past performance is not necessarily an indication of future performance.

On the other hand, the upward trajectory of oil prices following the announcement of successful vaccinations continues to reach levels not seen for the past 8 months. This momentum has been reinforced following OPEC's agreement to increase production by 500,000 barrels per day from January, as opposed to the initially planned 2 million.

Technically speaking, last week prices closed at $49.89 after rising by 1.92%, continuing November's trends where the price rose over 25%, finally surpassing the high zone of the strong side channel and its average of 200 sessions.

During the early hours of Monday, Brent is rising around 1%, thus surpassing the $50 level. It is important to see if it will be able to sustain this break over time and seek new highs. Should it fall back below its previous resistance level (green), the oil could re-enter the laterality whose main support would be the blue band.

Source: Admiral Markets MetaTrader 5 - Brent Daily Chart. Date Range: September 9, 2019, to December 14, 2020. Date Captured: December 14, 2020. Past performance is not necessarily an indication of future performance.

In 2015, the value of Brent fell by 35.12%, in 2016, it increased by 45.22%, in 2017, it increased by 18.66%, in 2018, it fell by 21.36% and in 2019, it increased by 25.20%. In five years, therefore, it had risen by 14.38%.

Discover Trading with MetaTrader 5

Admiral Markets offers traders the number 1 multi-asset trading platform in the world completely free! MetaTrader 5 enables traders access to superior charting capabilities, free real-time market data & analysis, the best trading widgets available, and much more! Click the banner below to start your free download:


The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

1.This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

2.Any investment decision is made by each client alone whereas Admiral Markets UK Ltd (Admiral Markets) shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.

3.With a view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.

4.The Analysis is prepared by an independent analyst Roberto Rojas, Freelance Contributor (hereinafter "Author") based on personal estimations.

5.Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.

6.Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.

7.Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.

Admirals An all-in-one solution for spending, investing, and managing your money

More than a broker, Admirals is a financial hub, offering a wide range of financial products and services. We make it possible to approach personal finance through an all-in-one solution for investing, spending, and managing money.