Retail and recreation activity declined in December again on the back of further restrictions implemented to fight against the pandemic. The drop reached -28% at the end of December compared with the baseline.
In terms of monetary policy, a soft jobs report will probably have little to no impact. The December’s FOMC minutes provided clear guidance that near-term adjustments to asset purchases are unlikely and that monetary policy will remain accommodative for the time being. All the participants agreed that the current monetary policy stance and path of asset purchases are appropriate and that any changes should not be driven by specific numerical criteria (such as a level of unemployment) but by a broad and qualitative assessment of the recovery.
On a final note, a negative print might increase volatility on the EURUSD cross and temporarily favor safe assets, but it should not affect the long term trend. With the cyclical recovery in sight, the search for value and diversification, we remains bullish on EURUSD in the near and medium term, with a first target at 1.25. We especially consider that continued optimism around the U.S. fiscal stimulus and the Biden administration, as well as relatively clean positioning suggest there is room for further upside in the near term.