Market Brief: Cautious start in arguably last important week of 2019

  • Market update at 13:10 GMT. In FX, EUR and JPY were the strongest while AUD was the weakest. European stocks were lower, led by Italy’s FTSE MIB, with US index futures also pointing to a slightly weaker open following the sharp NFP-related gains on Friday. Among key commodities, gold was higher, and oil was lower on profit-taking following last week’s OPEC-related gains.

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  • AUD weakened on slight risk-off tone and as China’s exports fell 1.1% from a year earlier, the fourth consecutive decline. The falls reflect the negative impact from the nation’s 18-month long trade war with the US. Shipments to the US were down 23%, the worst showing since February and the twelfth straight decline.
  • EUR was higher on the back of news Eurozone Sentix Investor Confidence unexpectedly improved to +0.7 from -4.5 previously. This was only the second time the barometer printed above zero in 2019, suggesting investors were just about feeling optimistic about economic outlook when the survey was conducted, after being pessimistic for much of the year.
  • USD was a tough lower after Friday’s gains when the nonfarm payrolls report for November showed the number of jobs added to the economy easily exceeded expectations at 266K versus consensus forecast of 180K. The lack of further gains suggests investors don’t expect the jobs report to materially change the Fed’s assessment on interest rates outlook, at the FOMC’s meeting later on in the week.
  • JPY hardly reacts to positive news from Japan, but with the lack of news flow it could be that the safe-haven currency is benefitting from the fact Japan’s annualised GDP was unexpectedly revised to 1.8% YoY from 0.7%. Quarterly GDP was revised higher to 0.4% from 0.2% prior.
  • The US-China trade situation remains uncertain. Another round of US tariffs on $156 billion of Chinese goods is due next Sunday - unless the two sides manage to strike a phase one deal in time, in which case the new and some of the existing tariffs may be cancelled. However, there was no sign of that happening at the start of this week. This may help explain the lack of a positive follow-through in global stocks after Wall Street’s 1% rally on Friday:

  • Economic calendar is light today with no major US data scheduled for releases. From Canada we have housing starts and building permits, at 13:15 and 13:30 GMT respectively.




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