Market movers today
Today is very quiet in terms of economic data releases and events.
In Sweden, household lending will give additional input on the consumer reaction to recent developments.
Fed Chair nominee Jerome Powell’s confirmation hearing in the Senate’s Banking Committee is scheduled for tomorrow. We think his approval will go smoothly.
This week’s highlights are inflation data for both the euro area and the US. Also , ISM manufacturing on Friday will at tract at tention.
During the week, we have several important Scandi releases. In Sweden, focus is on the Q3 GDP dat a and the FSA’s Financial Stabilit yreport . In Norway, retail sales and unemployment figures are due out . In Denmark, the second release of Q3 GDP data is due to be published on Thursday.
Selected market news
It has been relatively quiet over the weekend both in terms of news and price actions on financial markets. The moderate positive risk appetite seen in the European session on Friday was carried over to the US session and US equities ended Friday slightly higher as investors returned from holiday.
In Asia, most regional equity indices are trading lower this morning as Chinese markets have resumed the decline. The Chinese CSI300 index is trading 1.3% lower at the time of writing. In Japan, a stronger yen weighs on Japanese equities. Over the weekend, BoJ member Hitoshi Suzuki joined the camp of BoJ officials, hinting that the BoJ might consider adjusting its policy mix saying that ‘it wouldn’t be strange if the BOJ conducted fine-tuning so market part icipants can familiarise themselves with a gradual process; as CPI approaches 2%, there should be a discussion on it ‘. Meanwhile, the recent flat tening of the US yield curve has eroded the profit potential significantly for Japanese investors buying US Treasuries. Further flat tening pressure on the US yield curve could lead to further yen appreciation.
The US PMIs released on Friday fell short of expectations with the manufacturing PMI declining to 53.8 in November from 54.6 in Oct ober while the service PMI fell to 53.7 from 55.3. The decline in the US PMIs stands in contrast to the ISM survey, which increased in October. Overall, the PMIs indicate slightly slower growth ahead, but still at healthy levels.
The combination of weak US PMI survey and the strong German Ifo survey support led a strong rally in EUR/USD on Friday with the cross jumping one figure from mid-1.18 to mid-1.19 and thereby breaking above the key resistance level at 1.1880.
On Friday, European Council President Donald Tusk gave UK Prime Minister Theresa May a deadline of 4 December to make additional efforts to resolve differences in the Brexit negotiations. If no progress is seen in the next 10 days, EU leaders are not likely to say that sufficient progress has been made when EU leaders meet at the EU Summit on 14 December. The divorce bill and what to do about the Irish border are the two main obstacles.
