It has been a busy start to the week, with Sterling leading the charge in heading to a 20 month low after the UK PM, May, postponed the parliamentary vote on Brexit. In realising she had no chance of winning, she has gone for buying time in the hope of eventually getting her deal passed although this currently looks to have little chance of success – and it seems as though Cable could head a lot lower yet. Elsewhere in the FX markets, the early Asian weakness in the US$ has been largely reversed in a choppy session, with the Euro being dragged down by Sterling, while the Aud and kiwi are also down, in line with the negative risk sentiment seen in the stockmarkets. US$Jpy is a bit higher although the Chf is finding some safe haven demand from those wishing to exit Sterling.
At the time of writing, the US stock markets are flat to +0.5%, after having recovered from an early selloff, with the DJI and the S+P both down around 0.25%, while in the commodities complex, Gold is down around 0.4% and WTI is also lower, by 3.7%, just a day after rallying on the cuts promised by Saudi Arabia and its allies but pressured by the trade and global growth outlook. It remains above 50.00 but for how long remains to be seen.
In terms of data, the EU Sentix Investor Confidence dropped sharply to -0.3 in December, down from 8.8 and missed expectation of 8.4, the fourth decline in a row, and lowest reading since December 2014. The Expectation index also dropped to -18.8, lowest since August 2012. Sentix noted that “the dynamics of the downturn are similar to those of the pre-crisis year 2007.
Looking ahead, the session will kick off with the NZ Electronic Card Retail Sales, the Australian NAB Business Conditions/Confidence and Q3 House Price Index (exp -1.5%). Europe will look to the UK Jobs data (exp 4.1%, Claimant Count +13.2K, Employment Change +25K) and the ZEW while the US will focus on the PPI (exp 0.00%mm, 2.6%yy) and the API Weekly Crude Oil Stock Inventory.
Economic data highlights will include:
Tue: NZ Electronic Card Retail Sales, Monthly Inflation Gauge, Australian House Price Index, NAB Business Conditions/Confidence, China New Loans, UK Unemployment , German/EU ZEW Economic Sentiment Survey, US PPI,
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