Here are the latest developments in global markets:

Forex: Sterling rallied above 1.35 against the dollar and touched a fresh one-month high versus the euro after EU parliamentary members of the Brexit group said there was a "very good chance" of a deal and that May’s meeting with the President of the European Commission could resolve main issues. The euro was on track to post a second red daily candle on the back of a stronger dollar despite the Eurozone’s Sentix investors confidence index in December and PPI readings in October remaining robust. Dollar/yen broke above the113.00 key-level (+0.70%).

Stocks: European stocks extended their gains, with the pan-European STOXX 600 surging by 1.0%. The German DAX 30 gained 1.35%, while the Spanish IBEX 35 jumped by 1.24% with all component sectors being in the green. The British FTSE 100 was up by 0.50%. Futures markets pointed to a higher open on Wall Street.

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Commodities: Oil prices extended losses despite the Saudi Arabian energy minister saying on Monday that the OPEC will not alter supply curbs in the second half of 2018, refuting concerns of an early exit from the deal. However, he added that oil producers might discuss when to raise output in June. WTI crude declined by 1.11% on the day to $57.71 per barrel and Brent fell by 0.90% to $63.16. Gold was 0.56% down at $1,272.70 per ounce as demand for riskier assets increased.

Day ahead: US factory orders coming up; Brexit updates attract attention

The calendar will be light of data for the remainder of the day, with US factory orders being the only major pending figures (1500GMT). The numbers published by the US Census Bureau are expected to show a contraction of 0.4% m/m in new manufacturing orders in October after a growth of 1.4% in September. The US currency would be eyed ahead of the release.

Besides that, any political news out of the country could have a dominant effect on the dollar. On the one hand, investors will be keen to hear any updates on the tax front, which promises massive tax cuts to businesses and provides some relief to individuals, after Senators approved their tax version of the relevant bill on Saturday. Note that the House of Representatives and the Senate will reconcile their tax plans this week. If they manage to reach an agreement, then the promised tax cuts can then be signed into law by US President Donald Trump.

On the other hand, any developments in the investigation of the Russian meddling into the 2016 US presidential campaign could shake the dollar. The latest developments revealed that the former security council, Michael Flynn, made fake statements regarding the conversations he had with the Russian ambassador.

In other areas of interest, markets will keep a close eye on May’s meeting with the President of the European Council, Jean Claude Junker, in Brussels. May who will probably be accompanied by the UK Brexit secretary David Davis and his EU counterpart, Michel Barnier, is expected to provide progress on three key elements (Irish border, the withdrawal bill, rights of the EU citizens) demanded by the EU for negotiations to move to the next stage of future relations. This is May’s last attempt to break the deadlock ahead of the EU summit on December 14.


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