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
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