Earlier in the Day:
There were no material stats released through the Asian session this morning, leaving the markets to ponder on what’s to come in the week ahead and the recent build-up of geo-political risk across key economies.
The lack of direction through the session left the markets in retreat, with the Nikkei and Hang Seng down 0.32% and 0.6% respectively at the time of writing, while the CSI300 was down 1.34%, continuing on from last Thursday’s sell-off.
The ASX200 bucked the trend in the early part of the session closing with a 0.1% gain.
There’s plenty for the markets to consider through the week including whether the U.S tax reform bill will progress and if OPEC and Russia are able to follow through on initial discussions and deliver an extension to the current agreement to the end of next year.
On the data front, manufacturing PMI numbers out of China will be in focus towards the end of the week.
With equities in retreat, the Aussie Dollar was down 0.13% at $0.7607 at the time of writing, commodity prices easing from last week’s gains. The Yen was up 0.16% to ¥111.35 against the Dollar, which was flat ahead of the European open, appetite for the Yen on the rise through the session as the equity markets hit the pause button.
The Day Ahead:
It’s going to be a relatively quiet session this morning, with no material stats scheduled for release from the Eurozone.
The good news from the weekend was that prospects of Merkel forming a grand coalition with the SDPs had improved, with talks expected to continue through to Christmas. Pressure intensified for the SDPs to step up in the interest of the nation, though it remains to be seen whether common ground can be found. Merkel may have been on a weaker footing post the German elections, but in-Party support has improved.
According to the polls, a grand coalition is the way forward as far as the nation is concerned and for there to be limited disruption to the economy, a conclusion to talks would need to be sooner rather than later. For now, the economic numbers have continued to impress and, with November prelim inflation figures due out later this week, the EUR could hold on to current levels should a pickup in input and output prices across the Eurozone’s private sector translate. ECB President Draghi had spoken recently of an expectation that inflation would pick up in the near-term. The PMI survey certainly supported that sentiment.
At the time of the report, the EUR was down just 0.05% at $1.1927, with news from Germany likely to be the key driver through the day, though should the risk off sentiment filter through to the European and Asian sessions, the EUR could see some upside through to the U.S session.