WH economic advisor Kudlow’s constructive comments on the trade deal were the main reason for a decent opening of European dealings. Focus later shifted to the US and the October retail sales and industrial production figures in particular. The first ended up pretty close to consensus with headline sales rising 0.3% m/m (vs. 0.2% m/m expected). 6 out of 13 categories printed an increase. Core measures advanced 0.1% m/m, less than the 0.3% expected. The control group, seen as a proxy for private consumption in GDP calculations, met consensus at 0.3% m/m. Industrial production missed estimates by a larger margin (-0.8% m/m vs. -0.4%). Capacity utilization declined to 76.7%, the lowest level since September 2017. The total data package was too mixed however to leave a mark at trading. US yields rise 2.5 bps across the curve amid a slightly better (trade related) sentiment. German yield curve changes vary from 1 bps (2-yr) to 3 bps (30-yr). Peripheral spreads narrow in Italy (-6 bps) but widen marginally in Spain (+1 bps) and Greece (+2 bps). EUR/USD bottomed out further after slipping below 1.10 yesterday. The currency pair is trading at 1.1040 vs. 1.1020 at opening. USD/JPY is grinding higher, filling bids at 108.75 at the time of writing.

Labour leader Corbyn launched another daring election promise today. He pledged to offer free internet to all UK consumers by nationalizing the broadband unit of a national telecom company. Total cost: a sloppy 20 billion pounds, funded by taxing the tech giants. The idea follows Corbyn’s earlier plans to nationalize the postal service, the railways and water and energy utilities. Sterling isn’t all that unnerved. However, that might change if the Labour Party would really gain traction in polls. The UK socialists are in fact performing better in recent polls but they are still lagging the Tories with some 10 to 15 percentage points. That’s enough for markets not to worry at the current stage. The British pound did lose some ground initially though we put it down to technical trading. Some consolidation was due after strengthening to the lower side of the 0.856/866 EUR/GBP range, which was rather surprising given this week’s UK data mostly disappointed (GDP, industrial production, inflation, retail sales). EUR/GBP reversed its intraday gain abruptly after the Telegraph reported that the Brexit Party will not compete the Tory party in 43 non-Conservative seats, further improving prospects for a Tory majority. EUR/GBP is changing hands in the 0.855 area (unchanged). Cable rises to 1.291.

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EU Commission vice-president Dombrovskis said that he is planning to extend access to London-based clearing houses for EU clients (“equivalance”) beyond March 2020. The risk to financial stability has not yet been fully removed, because the financial industry has not so far fully prepared for a no-deal brexit, he added.

The International Energy Agency said in its monthly report that the OPEC+ countries face a major challenge next year as demand for their crude is expected to fall sharply. Additionally, they raised next year’s expected output from non-OPEC countries from 2.2 mio to 2.3 mio barrels a day (1.8 mio bpd in 2019); citing production from the US, Brazil, Norway and Guyana. Brent crude temporary fell from $62.5/barrel to $62.

The Chilean peso gained more than 2.5% against the dollar after lawmakers agreed to hold a referendum to replace the Pinochet-era constitution. Chile’s existing Magna Carta lacks legitimacy according to protestors who want the country’s social and economic model overhauled. USD/CLP fell 808 to 780.


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