Improved PMI Index Raises Investor Morale Awaiting Fed

December 16, 2020 14:30

Improved PMI Index Raises Investor Morale Awaiting Fed

Activity in the euro zone recovered slightly in December: 

  • The PMI index advanced by IHS Markit, corresponding to the month of December, was better than expected, standing at 49.8 from 45.3 the previous month, already touching 50, the figure that limits growth and contraction. 

This positive data, together with the advances in the Brexit agreement and the imminent arrival of a vaccine against Covid-19 in Europe, has improved the mood of investors. All of this, despite new restrictions announced in several countries, such as Germany.

The main European Indices are registering gains close to 1%:

  • The DAX is up 1.5%
  • The FTSE 100 is up 1.05% 
  • This follows the positive tone with which they started the week and continuing in the wake of Wall Street. 

Will this be the start of the Christmas rally?

Optimism has also had a favourable impact on the euro, which is strengthening against the dollar. This bullish sentiment could take the European currency to levels close to 1.25. Evolution of the past 5 years: 2019 = -2.21%, 2018 = -4.47%, 2017 = +14.09%, 2016 = -3.21%, 2015 = -10.18%. 

eurusd chart 16 December

Source: Admiral Markets MetaTrader 5. EURUSD daily chart. Data range: from October 30, 2019, to December 16, 2020. Prepared on December 16, 2020, at 11:30 a.m. Keep in mind that past returns do not guarantee future returns.

Investors also remain awaiting the Federal Reserve meeting on monetary policy and, above all, the subsequent appearance of Jerome Powell, as he will comment on the economic outlook for the United States and perhaps advance new stimulus.

 

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