Market Roundup
• Chinese official says 'consensus steadily increasing' in U.S. trade talk.
• Progress made on trade component of G20 statement - Argentine minister.
• Fed’s Williams warns inflation expectations could slip over time if Fed sticks with current 2% targeting framework.
• U.S., Canada, Mexico sign trade deal, Trump shrugs off Congress hurdle.
• UK PM May says she's focused on her Brexit deal, not a plan B .
• Mexican peso dips on trade worries, president-elect inauguration.
• Incoming Mexican president: 'neo-liberal' oil plan shelved.
• US Nov Chicago PMI, 66.4, 58.0 forecast, 58.4 previous.
• CA Q3 GDP QQ, 0.5%, 0.7% previous
.
• CA Q3 GDP QQ Annualized, 2.0%, 2.0% forecast, 2.9% previous.
• CA Q3 GDP YY, 2.06%, 1.91% previous, 1.90% revised.
• CA Sep GDP MM, -0.1%, 0.1% forecast, 0.1%.
• CA Oct Producer Prices MM, 0.2%, 0.1% previous, 0.2% revised.
• CA Oct Raw Materials Prices YY, 7.7%, 14.6% previous, 14.5% revised.
Looking Ahead - Economic Data (GMT)
• 2 Dec 21:30 Australia Nov AIG Manufacturing Index, 58.3 previous.
• 2 Dec 21:45 New Zealand Q3 Terms of Trade QQ, 0.1% forecast, 0.6% previous
• 2 Dec 21:45 New Zealand Q3 Export Volumes SA, 2.0% forecast, 1.1% previous
• 2 Dec 21:45 New Zealand Q3 Import Prices SA, 2.4% forecast, 1.7% previous
• 2 Dec 21:45 New Zealand Q3 Export Prices SA, 2.2% forecast, 2.4% previous
• 2 Dec 23:50 Japan Q3 Business Capex (MOF) YY, 12.8% previous
• 3 Dec 00:30 Japan Nov Nikkei Mfg PMI, 51.8 previous
• 3 Dec 00:30 Australia Oct Building Approvals, -2.0% forecast, 3.3% previous
• 3 Dec 00:30 Australia Oct Private House Approvals, -2.7% previous
• 3 Dec 00:30 Australia Q3 Business Inventories, 0.4% forecast,, 0.6% previous
• 3 Dec 00:30 Australia Q3 Gross Company Profits, 2.8% forecast,, 2.0% previous
• 3 Dec 01:45 CN Nov Caixin Mfg PMI Final, 50.0 forecast, 50.1 previous
Looking Ahead - Events, Other Releases (GMT)
• Dec 1 N/A US President Donald Trump to meet Chinese President Xi Jinping over dinner in Buenos Aires
• Dec 1 09:00 Thomas Jordan, chairman of the Governing Board of the Swiss National Bank, speaks at the University of Bern
• Dec 3 08:00 Riksbank executive board meeting in Stockholm
• Dec 3 08:30 Denmark's Central Bank Governor Lars Rohde, business minister Rasmus Jarlov, tax minister Karsten Lauritzen and others speak at an event in Copenhagen
• Dec 3 13:00 Fed Vice-Chair for Supervision Randall Quarles participates in a moderated question-and-answer session in New York
• Dec 3 14:00 Euro zone finance ministers meet to discuss deeper euro zone integration in Brussels
• Dec 3 14:15 Fed New York President John Williams speaks at The Evolving Structure of the U.S. Treasury Market conference in New York
• Dec 3 15:30 Federal Reserve Board Governor Lael Brainard speaks at a conference in New York
• Dec 3 17:30 BoE Chief Economist Andy Haldane speaks in Cambridge on public policy in London
• Dec 3 17:30 BoE Chief Economist Andy Haldane participates in Annual Cambridge Public Policy Lecture in Cambridge
• Dec 3 18:00 Fed Dallas President Robert Kaplan participates in a moderated question-and-answer session in Laredo
Currency Summaries
EUR/USD is likely to find support at 1.1262 levels and currently trading at 1.1309 levels. The pair has made session high at 1.1368 and hit lows at 1.1302 levels. The euro declined against the U.S. dollar on Friday as investors prepared for the outcome of trade talks between the United States and China at the G20 meeting on Saturday, which investors expect will increase volatility across markets. U.S. President Donald Trump said on Friday there were some good signs ahead of the meeting with Chinese President Xi Jinping. Trade Representative Robert Lighthizer said on Friday he would be surprised if Saturday's dinner between Trump and Jinping "wasn't a success. The dollar index gained 0.51 percent to 97.268. Data on Friday showed growth in China's vast manufacturing sector stalled for the first time in over two years in November as new orders slowed, piling pressure on Beijing ahead of the trade talk. Investors are also continuing to evaluate comments by Federal Reserve Chairman Jerome Powell on Wednesday that the U.S. central bank's policy rate is now "just below" neutral, a level that neither brakes nor boosts a healthy U.S. economy. The immediate reaction sent the dollar tumbling as investors saw the Fed as likely to end its rate-hiking cycle sooner than previously expected.
GBP/USD is supported in the range of 1.2722 levels and currently trading at 1.2740 levels. It reached session high at 1.2777 and dropped to session low at 1.2730 levels. Britain's pound declined against the dollar on Friday as investors moved to the sidelines before the British parliament's vote on Brexit next month. British Prime Minister Theresa May said on Thursday she was focused on persuading lawmakers to back her EU divorce deal at a vote in parliament on Dec. 11 rather than preparing a plan B, accusing opponents of trying to betray voters over Brexit. May secured an agreement with European Union leaders on Sunday that will see Britain leave the bloc on March 29 with continued close trade ties, but the odds look stacked against her getting it through a deeply divided British parliament. The deal has been criticised by both eurosceptics and europhiles among May's own Conservative Party. Opposition parties and the small Northern Irish party which props up May's minority government have said they plan to vote against it. Those concerns were reflected in the currency markets, with the British currency down nearly 3 percent in the last three weeks and derivative markets indicating more hedging activity before the vote. The pound was last trading at $1.2740 against dollar. Against the euro, it was a shade stronger at 88.93 pence.
USD/CAD is supported at 1.3241 levels and is trading at 1.3293 levels. It has made session high at 1.3332 and lows at 1.3294 levels. The Canadian dollar weakened against its U.S. counterpart on Friday as oil prices dropped, while North American leaders signed a new trade pact and domestic data showed growth in the economy that was in line with expectations. Canada’s economy grew at an annualized rate of 2.0 percent in the third quarter, matching analysts' forecasts, data from Statistics Canada showed. Growth slowed from 2.9 percent in the second quarter on lower motor vehicle purchases and falling housing investment. Some market players were disappointed by the composition of the data and a contraction in gross domestic product for the month of September. But chances of another Bank of Canada interest rate hike as soon as January were little changed at 70 percent, the overnight index swaps market showed. The central bank, which has raised interest rates five times since July 2017, will make an interest rate decision next week, but is not seen moving rates. The Canadian dollar was last trading 0.2 percent lower at 1.3293 to the greenback.
USD/JPY is supported around 113.17 levels and currently trading at 113.57 levels. It peaked to hit session high at 113.70 and made session lows at 113.43 levels. The dollar strengthened against Japanese yen on Thursday as greenback rose. The leaders of the world's top economies gathered in Argentina on Friday for talks overshadowed by a U.S.-China trade war that has roiled global markets. All eyes will be on a planned dinner between Trump and Chinese President Xi Jinping on Saturday to see whether they can make progress toward resolving a trade dispute that has seen them exchange tariffs on hundreds of billions of dollars of imports. Trump has said he plans to significantly increase the current 10 percent tariffs on Chinese imports by January next year, which would sharply escalate the trade war between the economic heavyweights and shave nearly a percentage point off global growth in 2019.The dollar index was 0.2 percent firmer at 96.99 off almost one-week lows of 96.626 hit on Thursday after comments this week from Federal Reserve chief Jerome Powell which prompted investors to question whether the U.S. central bank is nearing the end of its rate-hiking cycle.A scaling back of U.S. rate expectations in recent weeks leaves the dollar index, which measures the value of the greenback against a basket of other major currencies, down 0.13 percent in November and set for the biggest monthly fall since July.
Equities Recap
European shares closed lower on Friday ahead of Saturday's crucial G20 talks between U.S. President Trump and China's Xi Jinping over trade.
UK's benchmark FTSE 100 closed up by 1 percent, the pan-European FTSEurofirst 300 ended the day down by 0.19 percent, Germany's Dax ended down by 0.4 percent, France’s CAC finished the day down by 0.2 percent.
Wall Street rose on Friday as investors hoped for progress on trade in a critical U.S.-China meeting over the weekend, and the S&P 500 and the Nasdaq posted their biggest weekly percentage gains in nearly seven years.
Dow Jones closed up by 0.73 percent, S&P 500 ended up by 0.78 percent, Nasdaq finished the day up by 0.77 percent.
Treasuries Recap
Yields moved in a narrow range on Friday and trading volume reached a three-month low ahead of trade talks between U.S. President Donald Trump and his Chinese counterpart on Saturday, after a Group of 20 meeting that began on Friday.
Trade volume of Chicago Board of Trade 10-year Treasury futures were at their lowest since Sept. 4. Treasuries traded in a narrow range, with a rise in two-year yields, and a fall in all others, with the biggest moves happening at the long end of the curve. That flattened the yield curve, the spread between two- and 10-year yields hitting 18.9 basis points, the lowest since Aug. 28.
Commodities Recap
Gold fell on Friday as the dollar strengthened ahead of trade talks between the U.S. and Chinese leaders at the G20 summit on Saturday, while palladium prices crossed the $1,200 per ounce mark for the first time.
Spot gold dipped 0.29 percent to $1,220.01 per ounce at 1:32 p.m. EST (1832 GMT). U.S. gold futures settled down 0.33 percent at $1,220.10 an ounce.
Oil prices edged lower on Friday due to concerns of oversupply and a strong dollar but losses were limited by expectations that the Organization of the Petroleum Exporting Countries (OPEC) and Russia would agree some form of production cut next week.
The two benchmarks, North Sea Brent and U.S. crude, still have had their weakest month in more than 10 years in November, losing more than 20 percent as global supply has outstripped demand.
Front-month Brent futures fell 80 cents, or 1.3 percent, to settle at $58.71 a barrel, ahead of expiry. The more active February Brent crude futures lost 45 cents to settle at $59.46 a barrel. U.S. crude dropped 52 cents, or 1 percent, to $50.93 a barrel.
