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AFEX Market Watch Mon December 5th 2016
Sunday Dec 4 Italian Constitution Amendment Vote Austrian Presidential Election
Monday Dec 5
All Day Eurogroup meetings
09:00 EUR Final Services PMI
09:30 GBP Services PMI
13:30 FOMC member Dudley speaks
15:00 USD ISM Non-manufacturing PMI
Tuesday Dec 6
03:30 AUD Cash rate and statement
08:15 CHF CPI
09:10 EUR retail PMI
09:30 GBP FPC Meeting minutes
13:30 CAD Trade balance
14:15 NZD Fonterra milk auction
22:00 NZD RBNZ Gov Wheeler speaks
Wednesday Dec 7
00:30 AUD GDP QoQ
08:30 GBP Halifax HPI MoM
09:30 GBP Manufacturing production MoM
09:30 GBP Industrial production MoM
15:00 CAD Bank of Canada rate statement and overnight rate
15:00 GBP NIESR GDP estimate
15:30 USD Crude oil inventories
Thursday Dec 8
00:30 CNY Trade balance
12:45 EUR ECB interest rate decision
13:30 ECB Press conference
13:30 USD Unemployment claims
Friday Dec 9
09:30 GBP Goods trade balance
09:30 GBP Construction output MoM
09:30 GBP Consumer inflation expectations
15:00 USD Prelim UoM Consumer sentiment
GBP - Sterling
· Last week saw Sterling gain against the Dollar and Euro as the Government suggested that a “soft” Brexit could be considered (if the EU were open to such a deal).
· Today sees the UK Government appeal to the Supreme Court as it tries to keep to its self-imposed end of March 2017 deadline for triggering Article 50. The verdict is due middle of January and if the Government loses the appeal it will have to go to Parliament to get approval.
· The weekend press was also full of ideas about a “grey” or “soft” Brexit. If this is the case then the Pound will continue to gain support, especially with Europe having to cope with the Italian referendum vote and Greek debt negotiations again.
· We have the important UK Services PMI due for release today as well as inflation expectations at the end of the week.
EUR - Euro
· If the market thought that it could get relief from the Austrian population voting in a green party president and moving away from populism it was disappointed as Italian PM Renzi conceded defeat for his constitutional changes at 11:20 pm GMT Sunday evening also announcing that he would resign Monday afternoon. Whilst he was speaking the Euro made new lows against the Dollar not seen since March this year and the market now asks whether a general election will be held or if a technocrat Government will be installed.
· Whilst the Euro has fallen quickly the market will now look at the Italian banking stocks to see how far and fast they will fall at today’s market opening.
· This week sees the ECB meeting on Thursday with the ECB now having been backed into a corner by the referendum vote.
· An announcement to extend QE is now a 65% probability. Greece was also toldover the weekend by Germany to make painful reforms if it wants to stay in the Eurozone. Alexis Tsipras has seen a record 20 point dive in popularity with 90% of Greeks now disgruntled by his Government. Difficult times loom again for Greece.
USD - Dollar
· Managed to stay firm last week as President elect Trump toured the US on a “Thank you” tour with the important US jobs data coming in above expectations at 178k and an excellent unemployment rate at 4.6%.
· President elect Trump has been tweeting about US firms moving abroad and being hit with a tax if they try to sell goods back to the US as well as upsetting China by talking directly to Taiwan. The details are slightly irrelevant but the overall view is the global trade will take a tumble.
Commonwealth et al
· Last week Opec agreed to production cuts and gave the Commonwealth currencies some support.
· This week sees the RBA setting interest rates on Tuesdaywhere analysts expect no change. The Bank of Canada meets on Wednesday and is expected to stand pat as well. New Zealand Prime Minister Key surprisingly resigned at the weekend.
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