US and China trade truce

Presidents Trump and Xi come to temporary truce agreement.

Previous Day's Market Highlights

Despite a busy macro calendar, major pairings were largely rangebound on Friday as markets were in wait and see mode ahead of a meeting between President Trump and President Xi at the G20 summit over the weekend. The highly anticipated meeting on the sidelines of the summit in Buenos Aires resulted in a temporary truce agreement to cease the imposition of any fresh trade tariffs for 90 days, leading to a risk on rally with the Aussie and Kiwi dollars all strengthening by around 0.6%. Equity markets also gained, with Hong Kong and Shanghai both adding more than 2%. 
 
The main data highlight was the latest set of Eurozone inflation figures, with both CPI and core CPI figures showing a decline from the previous month to 2% and 1% year-on-year respectively. The euro was largely unchanged despite this data miss, however investors will likely pay greater focus to the inflation data going into 2019 as the ECB begin to slowly withdraw crisis-era stimulus from the market.
 
Elsewhere, sterling experienced its third consecutive week of losses as investors grew increasingly cautious over the upcoming Brexit vote in parliament and the Canadian dollar held its ground despite GDP turning negative after seven consecutive months of growth. Losses for the loonie were limited due to the quarter-on-quarter figure remaining unchanged at 2%.
 
Finally, oil prices fell once again on Friday due to swelling global inventories. November was the weakest month in over ten years for both global benchmarks (Brent and WTI) with both losing over 20% due to global supply outstripping demand, however the benchmarks gained around 4% this morning as Sino-US tensions cooled ahead of this week’s OPEC meeting. In contrast, US equities ended the week on strong footing, with the S&P 500 index making an advance of almost 5% for the week – its strongest weekly advance since 2011.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1275 1.1506 1.1194 2.71%
GBP/USD 1.2819 1.3175 1.2723 3.43%
EUR/USD 1.1381 1.1500 1.1275 1.96%
GBP/AUD 1.7365 1.8148 1.7275 4.81%
GBP/NZD 1.8516 1.9648 1.8378 6.46%
GBP/CAD 1.6894 1.7285 1.6784 2.90%

Today's Market Highlights

A busy day to start a packed economic calendar this week. Today sees the release of manufacturing PMI figures from the Eurozone, UK and USA with all forecast to show continued expansion in the sector, albeit at a slower pace than previously. Investors are likely to focus particularly on the US figure especially with signs of a pause in the Fed’s tightening cycle on the horizon.
 
Despite the data, central bank speakers are likely to steal the limelight with the highlight being a television interview from Fed Vice Chair Clarida. Market participants will be looking for Clarida to reinforce his speech last week regarding the pace of monetary policy tightening in 2019 as well as looking for clues as to his estimate of the neutral interest rate level. Other Fed speakers include Governors Quarles and Brainard in addition to voting member Williams. MPC member Haldane is also scheduled to speak, however will likely have little effect on sterling with focus remaining on the political situation in the UK.
 
Further highlights for the week ahead include the final Reserve Bank of Australia and Bank of Canada meetings of 2018, where no change to monetary policy is forecast, in addition to the monthly US labour market report which will be closely watched as always to gauge the health of the US economy heading into the festive period.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:00am EUR Final Manufacturing PMI 51.5 51.5
9:30am GBP Manufacturing PMI 51.6 51.1
3:00pm USD ISM Manufacturing PMI 57.5 57.7