EU chief negotiator Barnier said this weekend that a trade deal between the EU and the UK “seems unlikely”. UK Brexit minister Frost also said there was “little progress” after the latest round of negotiations. The current transition period ends December 31, but the EU would like the deal to be agreed by October so that there is time for it to be approved by the European Parliament. If there is no deal, trade will have to continue on WTO terms as the UK government has said it will not extend talks. The UK has complained that the EU is blocking the process by insisting to resolve differences on fisheries and state aid before any other areas are discussed. While there had been progress on energy co-operation, participation in union programmes and anti-money laundering, there has been "no progress” on the subject of access to UK and EU fishing waters. The EU has also demanded a “level-playing field” – a set of common rules and standards on workers’ rights, environmental protection and taxation to prevent businesses having unfair advantage - as a non-negotiable pre-condition. The next round of talks starts on September 7. The British pound bought $1.3087 and traded at 90.27 pence per euro.
The US Food & Drug Administration authorised the use of blood plasma from recovered patients as a treatment option ahead of the Republican National Convention, where Donald Trump will be nominated to lead his party for four more years. E-Mini futures for the S&P500 gaining 0.4% on the news while European markets were also set for a climb with EuroStoxx 50 up 0.65% while Germany’s DAX and London’s FTSE added 0.6% each. Chinese shares rose too adding 0.8%. Wall Street indices are at record highs even as the world economy struggles to recover from the pandemic.
The US dollar steadied against major currencies as the forex market showed little reaction to US authorization of a coronavirus treatment. Against the euro, the dollar held steady at $1.1814, clinging onto gains made late last week. The single currency was on the defensive following disappointing manufacturing and services sector data for Europe released on Friday. The greenback bought 0.9102 Swiss franc, holding onto a 0.5% gain from Friday. The yen held steady, with the dollar changing hands at 105.85 yen, unmoved even after Japanese Prime Minister Shinzo Abe entered hospital amid speculation about his health. The onshore yuan traded at 6.9090, little changed on the day amid lingering doubts about frayed US-China ties. The Australian dollar held steady at $0.7178 after the state of Victoria reported its lowest daily rise in new coronavirus infections in seven weeks fuelling optimism that a deadly second wave there is subsiding. The New Zealand dollar was little changed at $0.6529 after the government extended a coronavirus lockdown in Auckland by four more days.
Federal Reserve Chairman Jerome Powell will discuss monetary policy on Thursday at the opening day of the Kansas City Fed’s annual symposium. This year the meeting will be held online, and not at the hunting and fishing resort of Jackson Hole, Wyoming because of the coronavirus pandemic. The quantitative easing that the Fed has deployed so far has flooded financial markets with excess liquidity and weighed on the dollar, leaving traders looking to more data for a gauge on the health of the global economy and hoping for a read from the Federal Reserve’s annual Jackson Hole retreat for guidance on the outlook for US monetary policy.
