Danske Research Team
Danske Bank A/S
Market movers today
In the absence of major economic releases, focus will continue to be on the coronavirus and how fast it is spreading. In the US, we get the weekly consumer comfort survey, which could be affected by some consumer anxiety, though most likely not, as the virus has not really spread to the US.
In Europe, the ECB's President Lagarde will address the European Parliament. While we don't expect it to be a near-term market mover, she may reflect on the strategic review, the Green new deal and the ECB's role in climate change.
As expected, US President Trump was acquitted by the US Senate yesterday evening.
Selected market news
The positive sentiment in global equity markets continued this morning as China cut tariffs on some US goods. Furthermore, efforts continue to halt the spread of the coronavirus. Hence, we are seeing further reversal in global fixed income markets and currencies, where yields are rising, while the yuan is strengthening and the yen is weakening.
Oil is rebounding on the back of the efforts to contain the virus and on the back of OPEC+ meeting in Vienna to reach a consensus to deal with virus. The discussion is to keep the production cuts for longer or make deeper ones.
US president Trump was cleared in the impeachment trial. This was expected, as the republicans hold the majority in the Senate. Only one Republican senator voted against Trump.
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Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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