In thin conditions on Friday, the action was mainly in oil, with WTI down by yet another 7.75%, which dragged the US stock markets down with it (-0.5%/0.75%) . Worries over a global trade war and rising US shale oil production drove WTI to a one-year low and a test of 50.00 now looks possible, with much likely to depend on the outcome of the G20 meeting later this week and how Donald Trump approaches it.
In the currency markets, the commodity bloc was heavy as risk sentiment deteriorated, while the Euro was lower after the release of the PMIs which mostly missed expectations. The EU PMI manufacturing dropped to 51.5 in November, down from 52.0 and missed expectation of 52.0, for the lowest reading in 30 months. The PMI services dropped to 53.1, down from 53.7, also missing expectation of 53.6, for the lowest reading in 25 months while the PMI composite dropped to 52.4, down from 53.1, the lowest in 47 months.
Elsewhere, Cable was choppy and heavy ahead of the weekends expected announcement on Brexit, while the US$ was mixed although the DXY finished the session +0.45%. The EU have now ratified the Brexit deal, so focus now turns to the UK Parliament.
Looking ahead, it is going to be a steady week of data flow although most of it will be of a secondary nature, but with much of the focus looking towards Wednesday’s FOMC Minutes and then, at the end of the week and heading into the weekend, the G20 Meeting in Argentina. The outcome of that will not be known until next Monday but all eyes will be on the US/China and to see if a communiqué can actually be released, unlike last week’s APAC Meeting.
Today’s focus will be on the EU/Brexit summit, and Cable is likely to be highly volatile. Aside from the Brexit announcement, where the focus will now turn to the deal being accepted by the UK parliament, traders will also look to the German IFO Business Climate/Expectations for guidance while the US will see the Chicago Fed National Activity Index, Dallas Fed Mfg Business. There will also be plenty of ECB speakers, including ECB’s Draghi/Nowotny/Coeure/Praet, as well as a speech from the BOE Governor, Carney, who presumably will give his backing to the Brexit deal.
Economic data highlights will include:
Mon: NZ Retail Sales, RBA Governor Lowe speech, Japan Coincident Index, Leading Economic Index, EU Brexit Summit, German IFO Business Climate/Expectations, Speeches; ECB’s Draghi/Nowotny/Coeure/Praet, US Chicago Fed National Activity Index, Dallas Fed Mfg Business Climate
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