Markets are generally underpinned by strong risk appetite at the start of the week following the US/China agreement over the ceasefire in trade war. US stocks are heading into the close around 1% higher, following the early lead from and the European and Asian markets. In the FX markets, the Aud$ and Kiwi are both firm, while elsewhere the US$ is mixed, although Sterling is heavy on the back of more negative Brexit headlines.
The metals are also firm, with Gold up almost 1%, while WTI is also staging a recovery from Friday’s lows, currently up 3.4% at 52.80 having earlier traded up to 53.80 in Asia, due to the exuberance over the ceasefire in the U.S.-China trade war.
In terms of data, the EU PMI manufacturing has been finalised at 51.8 in November, revised up from 51.5 but down from October’s 52.0, to be the lowest reading since August 2016. The individual nations PMIs were not much better and should continue to weigh on the Euro. Italy’s PMI manufacturing stayed in contraction and dropped to 48.6, a 47-month low, while the France figure dropped to 50.8, a 26-month low. Germany’s PMI manufacturing dropped to 51.8, a 31-month low and Spain dropped to 3-month low at 52.6.
Today sees a thin calendar although the $Aud may see a bit of action with the Current Account (exp -$10.2 Bio) and the RBA Interest Rate Decision both due. The RBA are expected to leave policy on hold – as they have done since August 2016 – and any volatility will arrive via the Statement, should it spring any surprise, which seems unlikely.
Economic data highlights will include:
Tue: Australian Current Account, RBA Interest Rate Decision, EU PPI, US ISM NY Business Conditions, Global Dairy Trade Index
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