12 Dec: US$ firms on hopes of US/China trade progress, & underpinned by some solid US data. US CPI today

By | December 12, 2018

The dollar is generally firmer against most counterparts on Tuesday, as China and the United States laid out a plan on the next stage of their trade talks to avert a trade war, while Sterling made a new 2 year low (1.2490) ahead of a dead-cat recovery as UK PM Theresa May seeks support from EU leaders to change her Brexit deal.

In terms of the dollar, Trump’s tweet saying “Very productive conversations going on with China! Watch for some important announcements!” did it no harm while, in terms of data, the core US PPI for increased by 0.3% last month, above economists’ forecasts of 0.1%. In the 12 months through November, the core PPI rose 2.7%.

During the session, Trump also said that he would be proud to shut down the government for border security concerns as he wants to build his wall. This had no major effect on the price action, but an impromptu press conference has now been called. No subject has been given at the time of writing, but be prepared for any possible surprise.

Stocks have been volatile and mixed, currently flat, although holding on well in the face of Donald Trump’s threat during the session to shut down the government at the end of the year. The metals are slightly lower while WTI is up by around 0.5%.

Looking ahead to Wednesday, the session will kick off with a busy Asian session that will include the release of the WBC Australian Consumer Confidence (Dec), Japan Machine Orders, Domestic Corporate Goods Orders Index, Tertiary Industry Index and the China Foreign Direct Investment figure for November. From Europe, the only data will be the EU October Industrial Production (exp 0.2%mm, 0.8%yy) while the focus will be on the US ,with the release of the November CPI (exp 0.0%mm, 2.2%yy – Ex F/E exp 0.2%/2.2%). The EIA Crude Oil Stocks Weekly Change and the Monthly Budget Statement will also be released. A possible leadership challenge in the UK and the Twitter Account of the POTUS will likely be where most of the attention is tuned to.

Note that the spotlight will begin to turn towards Italy as it attempts to reach a budget compromise with the EU. Conflicting reports abound, with some reports projecting that an accord is imminent while others say the battle lines have hardened ahead of a European Council meeting on Thursday.  Keep an eye on France as well. The Euro may well face further downside pressure after French President Macron’s concessions to anti-government street protests threaten to stir EU budget concerns. Macron’s new spending plans for France risk breaking the EU’s budget limit of 3% of GDP, which could then embolden Italy in their ongoing budget negotiations with Brussels. Have a good day.

Economic data highlights will include:

Wed: WBC Australian Consumer Confidence , Japan Machine Orders, Domestic Corporate Goods Orders Index, Tertiary Industry Index, China Foreign Direct Investment, EU Industrial Production, US CPI, Monthly Budget Statement, EIA Crude Oil Stocks Weekly Change

CURRENCIES
EURUSD: 1.1318
Res  1.1340  1.1370  1.1400
Sup  1.1305  1.1290  1.1265
USDJPY: 113.45
Res  113.75  114.15  114.55
Sup  113.00  112.60  112.25
GBPUSD: 1.2533
Res  1.2555  1.2585  1.2615
Sup  1.2490  1.2465  1.2440
USDCHF: 0.9932
Res  0.9955  1.0005  1.0060
Sup  0.9905  0.9860  0.9810
AUDUSD: 0.7204
Res  0.7215  0.7225  0.7240
Sup  0.7190  0.7175  0.7160
NZDUSD: 0.6876
Res  0.6885  0.6905  0.6920
Sup  0.6855  0.6835  0.6815
INDICES / COMMODITIES
S&P.fs: 2647
Res  2665  2685  2710
Sup  2630  2610  2590
DJ30.fs: 24505
Res  24620  24805  25010
Sup  24315  24150  23895
SPI200.fs: 5608
Res  5635  5660  5680
Sup  5575  5550  5520
XAUUSD: 1241.68
Res  1245  1250  1255
Sup  1240  1235  1230
XAGUSD: 14.55
Res  14.60  14.70  14.80
Sup  14.45  14.30  14.15
WTI.fs: 51.61
Res  52.35  52.75  53.20
Sup  51.15  50.65  50.05