Trump/China to steal G20 headlines
UK mortgage approvals beat forecasts with a seven-month high and net consumer lending data was also above consensus forecasts, supporting confidence in the spending outlook, but consumer confidence dipped. Sterling drifted weaker ahead of the New York open as the Bank of England’s Brexit deal scenarios were digested. The traditional month-end selling also appeared to undermine sentiment and the Euro moved below the 1.1235 level while the Dollar moved back below 1.2800. Speculation surrounding parliamentary moves intensified ahead of the December 11th parliamentary vote and the potential reaction to the expected defeat.
US jobless claims increased to 234,000, the highest level since May, although there may have been distortions surrounding the Thanksgiving Holiday. The year-on-year core PCE prices index fell to 1.8% from 1.9% and below the Fed’s 2.0% target. The data maintained expectations that the Fed could shift towards a slightly less hawkish stance.
Minutes from the November FOMC meeting stated that almost all policymakers considered that a further rate hike was warranted fairly soon if jobs and inflation data were in line with or stronger than current expectations. Many members considered that it might be appropriate at some upcoming meetings to begin putting greater emphasis on incoming data and adjust the language while a couple of members stated that further hikes could slow the economy.
The G20 Summit convenes today in Buenos Aires, and there is speculation that tough US rhetoric on China would underpin defensive US support while a conciliatory tone would tend to weaken the Dollar.
German unemployment declined to 5.0% from 5.1% and the November Eurozone business climate index strengthened to 1.09 for November from 1.01 previously. The Euro was then constrained by underlying concerns over potential trade tariffs on EU car exports but gained support from a further narrowing of German-Italian yield spreads triggered by small compromises in the Italian Budget negotiations. The budget deficit of 2.2% still falls short of the EU’s guidelines and the matter remains unresolved. German consumer inflation slowed to 2.3% for November from 2.5% previously and the Euro was unable to break the 1.1400 mark against the Dollar.
Data to Watch:
24h EUR G20 Meeting
08:00 CHF KOF Leading Indicator (Nov)
09:00 EUR Unemployment (Oct) (Italy)
10:00 EUR Unemployment Rate (Oct)
10:00 EUR ECB’s Mersch speech
10:00 EUR Consumer Price Index (YoY) (Nov)
10:00 EUR Consumer Price Index – Core (YoY) (Nov)
11:00 EUR Gross Domestic Product (QoQ) (Q3) (Italy)
11:00 EUR Gross Domestic Product (YoY) (Q3) (Italy)
13:30 CAD Gross Domestic Product Annualized (QoQ) (Q3)
14:00 USD FOMC Member Williams speech
14:45 USD Chicago Purchasing Managers’ Index (Nov)