U.S and China Trade Talks
It’s a big week ahead, with focus being on the resumption of trade talks between the U.S and China this morning. Brexit, the government shutdown, central bank policy and a number of key stats. That will provide further direction on where the global economy is heading going into the New Year.
Market review of Aussie Dollar,
The AIG Manufacturing Index fell from 51.3 to 49.5. In December to signal a contraction at the end of the 4th quarter. the first in 26 months. The December number came in at its lowest level since Aug-2016.
- 6 out of 7 activity indexes fell in December, indicating generally weaker conditions.
- Food & beverage manufacturers and businesses in smaller manufacturing sectors. And reported higher production in the run up to Christmas.
- Large metals, machinery & equipment and chemicals sectors reported a gradual slowing down of demand. Continuing a downward trend through the 2ndhalf of 2018.
- Across the manufacturing sectors, 5 of the 7 sectors expanded. 2 were stable with the large metals sector in contraction.
- 3 of the 7 activity indexes contracted in December, 3 were stable. With finished stocks the only activity index in expansion.
- Input prices rose to a 3-month high, with the average wage index also on the rise. Reflecting a continued upward trend in wages.
- In contrast, factory gate prices fell, weighing on margins at the end of the year.
Market review EUR,
Economic data scheduled for release through the day ahead includes November factory order and retail sales figures out of Germany. Along with retail sales numbers out of the Eurozone. With German factory orders likely to have the greatest impact on the EUR from a data front, forecasts being EUR negative.
Outside of the numbers, trade talks between the U.S and China will also provide direction and is ultimately expected to be the key driver through the week.
At the time of writing, the EUR up 0.16% to $1.1413.
Market Review Pound,
There are no material stats scheduled for release. Leaving the Pound firmly in the hands of Parliament and the start of the parliamentary debate over the Brexit deal. British PM Theresa May having delayed the vote from late last year.
At the time of writing, the Pound was up 0.12% to $1.2738.
Across the Pond, economic data scheduled for release includes November factory orders. The market’s preferred ISM non-manufacturing PMI number for December and finalized November capital goods, ship, non-defence, ex-air orders.
While factory and capital goods orders will provide some direction. The non-manufacturing PMI numbers will be the key driver on the data front. The services sector accounting for the lion’s share of the U.S economy, forecasts being Dollar negative.
At the time of writing, the Dollar Spot Index was down 0.08% to 96.103.
For the Loonie, economic data scheduled for release is limited to December’s Ivey PMI, which will have some influence. Though direction through the day will ultimately be hinged on market risk sentiment driven by U.S China trade talks. Any negative updates to weigh on crude oil prices and the Loonie at the start of the week.
The Loonie was up 0.04% to C$1.3369 against the U.S Dollar at the time of writing.