Tin tức thì trường

The main US stock indexes rose significantly, as the announcement of an agreement between the US and China on the first phase of the trade transaction led to de-escalation of tension between the two largest economies and the removal of one of the obstacles to global economic growth.

US Trade Representative Robert Lighthizer said on Sunday that the usual “clean-ups” would be added to the text of the agreement, but “it’s completely ready,” adding that the parties have yet to determine the date and place of official signing. He also noted that the deal would almost double US exports to China in the next two years.

Strong optimism was also fueled by strong economic data from China. Industrial production in China in November grew by 6.2% year on year, exceeding expectations (+ 5%). Retail sales in China also rose 8% last month, while economists forecast an increase of 7.6%.

Market participants also evaluated data from IHS Markit, which showed that US private sector business growth accelerated further in December. According to the report, the composite index of business activity in the US in December rose to 52.2 from 52.0 in November, which indicates the sharpest growth in private sector production since July. According to preliminary data, the index of purchasing managers of the manufacturing sector from IHS Markit practically did not change in December and amounted to 52.5 after 52.6 in the previous month, while the same indicator for the service sector rose to a five-month high of 52.2.

At the same time, a report published by the National Association of Home Builders (NAHB) showed that American homebuilders' confidence jumped to a twenty-year high in December. According to the report, the NAHB / Wells Fargo Housing Market Index rose in December to 76 from a revised 71 in November. Economists had expected the index to remain unchanged from the 70 that were originally reported the previous month. After an unexpected jump, the index reached its highest level since June 1999 (77 points).

Most DOW components completed trading in positive territory (26 out of 30). The biggest gainers were UnitedHealth Group Inc. (UNH; + 2.29%). Outsider were the shares of The Boeing Co. (BA; -4.21%).

Almost all S&P sectors recorded an increase. The conglomerate sector grew the most (+ 1.3%). Only the real estate sector (-0.1%) and the industrial goods sector (-0.2%) decreased

At the time of closing:

Dow 28,237.34 +101.96 + 0.36%

S&P 500 3,191.88 + 23.08 + 0.73%

Nasdaq 100 8,816.18 +81.31 + 0.93%

Analysts at ING note the Bank of England (BoE) has stuck to a fairly cautious mantra over recent meetings as the economic sentiment and activity deteriorated as the Brexit uncertainty intensified through the autumn.

"But in the wake of last week’s landslide election victory for the Conservative Party, markets will be on the lookout for hints that the committee is turning more hawkish.

After all, the Bank’s November projections predicted that some excess demand would emerge in 2021/22 – and those numbers accounted for the fact that the UK would leave the EU smoothly in January.

Theoretically at least, that implies that rates may need to rise to a higher level than markets anticipate over coming months.

In reality, we think that’s unlikely – at least in the first half of 2020. We are wary that the election result may not bring about a significant, or at least imminent, recovery in investment and hiring appetite – more on our thinking on that below.

We expect the Bank to retain a relatively cautious bias this week. The two committee members that voted for easing at the last meeting are likely to do so again, although we’re not expecting this consensus to build. Barring a significant deterioration in either the global backdrop or jobs market, we aren’t expecting rate cuts in 2020."

Analysts at TD Securities note that China’s industrial production rose by 6.2% YoY in November (market 5.0%, TD 5.1%), while retail sales increased by 8.0% (market 7.6%).

“Fixed assets (ex-rural) grew by 5.2% YTD y/y (mkt 5.2%). As reflected by stronger November imports data, gains in the Official and Caixin manufacturing PMIs, aggregate financing and new yuan loans, there has been some tentative signs of improvement in the manufacturing sector.

Gains in the new orders and output components of the November manufacturing PMI also pointed to an improvement in industrial production. This is encouraging news, highlighting some signs of a tentative bottoming in China's economy. The remove of the Dec tariffs threat and roll back of some previous tariffs suggests scope for further limited improvement.”

The National Association of Homebuilders (NAHB) announced on Monday its housing market index (HMI) jumped five points to 76 in December from an upwardly revised November reading of 71 (originally 70).  That represented the highest reading since June of 1999.

Economists had forecast the HMI to stay at 70.

A reading over 50 indicates more builders view conditions as good than poor. 

All three HMI components registered gains this month. The indicator gauging current sales conditions surged seven points to 84, while the component measuring traffic of prospective buyers increased four points to 58 and the measure charting sales expectations in the next six months rose one point to 79.

NAHB Chairman Greg Ugalde noted: “Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates and a strong labor market.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability. Higher development costs are hurting affordability and dampening more robust construction growth.”

Preliminary data released by IHS Markit on Monday pointed to a slightly stronger expansion in business activity in December as service sector growth accelerated to a five-month high, while manufacturing conditions continued to improve, albeit at a slightly slower pace than in November.

According to the report, the Markit flash manufacturing purchasing manager's index (PMI) came in at 52.6 in December, slightly down from 52.6 in November. Economists had expected the reading to stay at 52.6. A reading above 50 signals an expansion in activity, while a reading below this level signals a contraction. According to the report, the increase in the headline PMI was by further expansions in output and new orders, with the upturn in the latter remaining solid overall. Although rates of increase eased in each case,

growth remained more robust than those seen earlier in the year.

Meanwhile, the Markit flash services purchasing manager's index (PMI) jumped to 52.2 this month, from 51.6 in the prior month. The latest reading was the highest one since July. Economists had expected the reading to increase to 52.0. The companies recorded the fastest rate of new order growth for five months as well as a renewed rise in export orders at the end of 2019, following four consecutive monthly declines.

Overall, IHS Markit Flash U.S. Composite PMI Output Index came in at 52.2 in December, up from 52.0 in November, signaling the sharpest rise in private sector output since July.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at HIS Markit, noted: “December’s expansion was led by an improved performance of the vast services sector, accompanied by another month of steady manufacturing growth. Encouragingly, expectations for business activity in the year ahead lifted higher in both sectors to reach the highest since June to suggest the expansion will continue to gain momentum as we head into the New Year. Optimism reflected reduced fears over trade wars and more favorable financial conditions.”

Francesco Pesole, an FX strategist at ING, notes that the data published by the CFTC shows the speculative investors curtailed their net short exposure to sterling between 4-10 December, bringing the net short positioning below 10% of open interest for the first time since May. 

• "It is key to highlight that the move (+4% of o.i.) in positioning does not embed the election results, so expect the positioning indicator to advance further towards the neutral area in the next CFTC report.
• These sort of dynamics likely spell the end of the sterling short-positioning “advantage” that has exacerbated the upside movements in the currency a number of times in the past few months. This does not mean, however, that a neutral positioning may in any way curb more upside in GBP; we continue to see the balance of risks for EUR/GBP tilted to the downside in the remainder of the year, even after the post-election move."

U.S. stock-index futures rose on Monday as investors continued to cheer the announcement of the Phase One trade deal and react positively to some upbeat Chinese data.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Goldman Sachs (GS) upgraded to Buy from Neutral at Citigroup; target raised to $255

Micron (MU) upgraded to Positive from Neutral at Susquehanna; target raised to $85

UnitedHealth (UNH) added to Conviction Buy List at Goldman

The report from the New York Federal Reserve showed on Monday that manufacturing activity in the New York region improves slightly in December.

According to the survey, NY Fed Empire State manufacturing index came in at 3.5 this month compared to an unrevised 2.9 in November, remaining subdued for the seventh consecutive month.

Economists had expected the index to come in at 4.0.

Anything below zero signals contraction.

According to the report, the new orders index edged down three points to 2.6, indicating little change in orders, while the shipments index inched up three points to 11.9, indicating that shipments increased modestly. Meanwhile, unfilled orders dropped six points to -13.8, indicating that unfilled orders continued to decline, delivery times shortened, and inventories held steady. The index for number of employees was unchanged at 10.4, indicating that employment expanded for the fourth consecutive month. On the price front, input price increases continued to slow, with the prices paid index falling five points to 15.2, a multi-year low.

• Says low rates create strains on bank profitability
• Also has implications for financial stability

Analysts at TD Securities note that, with further declines in the manufacturing and services PMIs for December, the UK’s composite PMI fell to its lowest level since July 2016 in the immediate aftermath of the EU Referendum.

• “The manufacturing index fell from 48.9 to 47.4 (mkt 49.2) and services from 49.3 to 49.0 (mkt 49.5). The Markit report said, "Survey respondents overwhelmingly attributed lower business activity to a combination of domestic political uncertainty, a lack of clarity in relation to Brexit and subdued global economic conditions." The January numbers a month from now will be more significant though, as they'll be the first ones that incorporate the general election results and the easing of political uncertainty.
• Some MPC members believe that a lifting of uncertainty will unleash a wave of pent-up demand, and BoE policy going forward will be highly data-dependent.”

Analysts at Nordea Markets suggest that the Eurozone’s end-of-the-year PMIs confirm that the region is in a deep manufacturing recession, but still has a robust service sector.

• “The euro area composite PMI kept steady in December, just above the 50-mark at 50.6. This makes for a weak fourth quarter and implies a standstill in euro area growth.
• The divergence between the manufacturing and service sectors continued, as the manufacturing PMI disappointed and fell to 45.9 while the services component slightly improved to 52.4. Weakness from the manufacturing sector is still rather contained and not spilling over to the service sector so far.
• The manufacturing PMI in Germany surprised to the downside, and stood at 43.4, contrary to expectations of improvement. Services PMI came in a bit higher than last month, at 52.0. Employment components are worrying, with especially manufacturing staff cuts worsening. Subdued new orders are keeping a lid on investment. Germany continues to be a drag on euro area growth.
• In France, both manufacturing and services components remained in expansionary territory. Growth continues to be mainly driven by the private service sector. The manufacturing PMI did fall however, and came out at 50.3, a good bit below consensus of 51.5. Services PMI, on the other hand, saw an uptick, albeit marginal, to 52.4.”

• Says ECB is working on establishing consumer expectations survey
• Refrains from commenting on the policy outlook or the current state of the economy

James Smith, a Developed Markets economist at ING, believes that the latest decline in the Markit/CIPS UK PMIs is another stark reminder that the British economy is unlikely to be on the cusp of a sharp turnaround after last week’s election result.

• "The significant Conservative victory at last week’s election will inevitably spark discussion about whether the UK economy can step up a gear in 2020. After all, the Brexit deal will now almost certainly pass through Parliament in January, enabling the UK to leave the EU smoothly after all.
• Even so, we aren’t convinced that next year will see a full investment revival.
• Firstly, the latest data suggests the economic case for investment is not currently compelling. Both the manufacturing and services PMIs have fallen further below the break-even 50 level in the latest flash readings.
• Secondly, the uncertainty surrounding Brexit won’t fade entirely, even if the UK does leave the EU on schedule in January.
• True, the removal of the imminent ‘no deal’ risk will lift one key cloud of uncertainty for firms – the PMI’s gauge of future expectations rose to the highest since June. But pretty quickly into the new year, focus will turn to the transition period and the fact that an extension will likely be required to the 31 December 2020 end-date.
• While the jury is out on whether the bones of a very basic free-trade agreement can be achieved by then (it seems unlikely given past EU third-country negotiations), it is extremely unlikely that there will be enough time will be needed to allow businesses and border infrastructure to position for potentially big changes in trading regime. Without an extension, firms could face an abrupt single market exit at the end of next year, which in many cases will not look dissimilar to a ‘no deal’ exit.
• An extension is ultimately likely in our view, but until this is agreed, the lingering uncertainty could continue to cap on investment appetite in the early stages of the new year. This will also subsequently raise questions over the health of the jobs market, which has been showing tentative signs of deteriorating."

Analysts at TD Securities note the consensus expects the NY Empire manufacturing index to advance modestly to 5.0 in December up from 2.9 in November, which would keep it close to the average of the year.

• “The consensus anticipates the preliminary release of the Markit PMI to show an unchanged number at 52.9 for December. This would follow three consecutive monthly increases in the index from August where it stood at 50.3.”

Bert Colijn, a senior Eurozone economist at ING, notes that the composite eurozone PMI was unchanged at 50.6 in December.

• "Let’s start with the positive news: the eurozone's service sector remains resilient as the industrial recession is about to be extended into its third year. Service sector strength is boosted by a surprising labour market and contagion has been limited so far as problems in industry are in part concentrated in the auto sector and its supplying sectors. Still, whether this remarkable resilience can continue is the question as employment growth is slowing, weakening the prospects for domestic demand growth over the winter months.
• The further weakening in the manufacturing PMI came as somewhat of a surprise as surveys had recently indicated that the downturn had been moderating. The continued manufacturing contraction throughout Q4 indicates that recession concerns, while moderating somewhat due to better geopolitical news, can still not be discarded for now.
• Risk of contagion to the service sector remains until downside risks have fallen and result in a pickup in manufacturing activity and confidence. While the first is happening with a phase one trade deal set to be signed soon and a British election result that lowers the chances of a cliff-edge Brexit, the question is whether this comes soon enough to have a quick impact on manufacturing activity and confidence. If it does, the eurozone could be in for a positive surprise in 2020. If not, then talk of the F-word may be just as common in 2020 as it was 2019."

• We plan to start process for withdrawal agreement bill before Christmas
• We plan to bring back Brexit bill to parliament on Friday
• We are aiming for Canada-style free trade agreement with no political alignment
• No-deal planning has continued on a contingency basis

Analysts at Danske Bank note that after some conflicting reports, both China and the U.S. officially confirmed the landing of a phase one deal and more details of the agreement came to light.

• “China has committed to buy at least USD40bn of US agricultural goods annually, to tighten protection for US intellectual property, to ban forced technology transfers from US companies and to refrain from competitive devaluations. In return, the US canceled the planned tariff hike this Sunday and agreed to cut tariffs on USD120bn of Chinese imports that were introduced in September to 7.5% from 15% (tariffs of 25% on some USD250bn of Chinese imports remain in place).
• It is expected that the agreement will be signed in January before talks about the more thorny issues will start in a phase two deal. Although a bumpy road still lies ahead, we think the worst of the trade war probably lies behind us.
• Markets cheered the switch from escalation to de-escalation on the trade front and the removal of two prominent downside risks to the global economy led to a clear performance across cyclical currencies in DM and EM space. This morning, the People's Bank of China set its daily reference rate for the yuan at the strongest level since early August.”

• Domestic economy has been surprisingly robust recently
• But decline in production of export-reliant industry is likely to continue
• Companies in Germany are now more reluctant to invest

Britain's budget forecasters said changes to the way that official statisticians measure borrowing would add about 20 billion pounds ($26 billion) a year to the country's budget deficit.

The Office for Budget Responsibility estimated that the deficit would stand at 33.3 pounds in 2023/24, compared with a previous estimate of 13.5 billion pounds, due to changes in the accounting treatment of student loans and corporation tax.

Britain's government had previously said it was aiming to turn its budget deficit into a surplus by the mid-2020s.

Standard Chartered analysts suggest that China’s November growth data has beaten the market expectations with industrial production (IP) growth surging to 6.2% YoY from 4.7% in October.

“Services-sector growth edged up to 6.8% y/y from 6.6% prior. The labour market remains resilient, with the surveyed city unemployment rate unchanged at 5.1%. Retail sales growth picked up to 8.0% y/y from 7.2% in October, driven by higher inflation and Singles’ Day sales promotions. Fixed asset investment (FAI) growth accelerated to 5.2% y/y from 3.7% in October on resilient real-estate investment, while infrastructure investment remained soft and manufacturing investment weakened. Overall, growth momentum appears to have improved in November, supporting our forecast of a tentative stabilisation in Q4-2019. The recent Central Economic Work Conference (CEWC) confirmed that the top priority for 2020 is to achieve “a moderately prosperous society”. We expect the government to set a growth target at around 6% for 2020, providing policy support for a slightly higher growth rate. This includes a proactive fiscal policy, with a shift in fiscal support from tax cuts to spending, and an accommodative monetary policy to support expansionary fiscal policy.”

China central bank's net foreign-exchange sales nearly doubled in November from October amid renewed strength of the U.S. dollar.

The People's Bank of China sold a net 1.18 billion yuan ($169 million) in foreign exchange in November, compared with net sales of CNY598 million in October, according to data released by the central bank on Monday.

The PBOC's foreign-exchange purchase position, which has been declining for 16 straight months, stood at CNY21.234 trillion at the end of November, central bank data showed.

The yuan edged 0.1% higher against the dollar last month after rising 1.4% in October, according to Wind.

Axel Rudolph, analyst at Commerzbank, notes that GBP/USD trades back around the March peak at 1.3382, having briefly reached 1.3515 post the UK election result last week.

“Above the high at 1.3515 sits the December 2017 high at 1.3550 and still further up the September 2017 peak at 1.3658 as well as the February 2018 low at 1.3712, all of which are now in focus for the weeks to come. Support is to be found between the 1.3270 late March high and the 1.3217 January peak. There is also support to be seen at the 1.3187 May peak. A daily chart close below the 1.3050 December 12 low would put the 200 day moving average at 1.2699 back on the plate.”

The German economy is more or less stagnating, the economy ministry said on Monday, adding there are initial signs that an industrial recession could be coming to an end as orders stabilise.

The ministry also said in its monthly report that indicators at the start of the fourth quarter pointed to subdued private consumption even though disposable incomes continued to rise.

The latest IHS Markit / CIPS Flash UK Composite PMI data revealed a decline in private sector output for the second month running in December.

At 48.5, down from 49.3 in November, the seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index – which is based on approximately 85% of usual monthly replies – pointed to a modest reduction in overall business activity. Moreover, the rate of decline was the fastest recorded since July 2016.

December data pointed to lower volumes of service sector output and a much sharper drop in manufacturing production, with the latter falling to the greatest extent for almost seven and-a-half years. Survey respondents overwhelmingly attributed lower business activity to a combination of domestic political uncertainty, a lack of clarity in relation to Brexit and subdued global economic conditions. 

The seasonally adjusted Flash UK Manufacturing PMI – a composite single-figure indicator of manufacturing performance – dropped to 47.4 in December, from 48.9 in November, to signal the sharpest downturn in overall business conditions since August.

Service sector output declined only slightly during December. At 49.0, down from 49.3 in November, the seasonally adjusted Flash UK Services PMI Index remained below the 50.0 no-change level for the second month running.

According to the flash PMI, the eurozone economy failed to pick up momentum in December, rounding off a fourth quarter in which output rose at the weakest pace since the economy pulled out of its downturn in the second half of 2013. Employment growth slowed to a five-year low and price pressures moderated further. However, while the manufacturing recession deepened, the service sector showed welcome signs of resilience in the face of the headwinds from the factory downturn. By country, France continued to provide a key support to growth in the single currency area, but Germany remained in a mild downturn, fueled by a steepening manufacturing recession. Growth in the rest of the region continued to run at the slowest for six years.

At 50.6 in December, the ‘flash’ IHS Markit Eurozone Composite PMI remained at that level for a third successive month, running just above the 50.0 no-change level to indicate only very modest growth of output across the manufacturing and service sectors for a fourth consecutive month. The December reading rounds off a fourth quarter in which output rose at the weakest pace since the economy pulled out of its downturn in the second half of 2013.

Some brighter news came from a rise in new order inflows for the first time since August, but the increase was only marginal. Backlogs of work consequently fell for a tenth straight month, albeit declining at the slowest rate since June.

According to the report from IHS Markit, business activity in Germany remained subdued in December, with growth across the service sector continuing to be offset by a downturn in manufacturing. Confidence towards the outlook improved, but sustained weakness in new orders continued to curb firms’ willingness to take on new staff. On the price front, the survey showed average charges for goods and services rising at the slowest rate for over three years, which reflected both soft demand and muted underlying cost pressures.

The Flash Germany Composite Output Index – which is based on approximately 85% of usual monthly replies – was unchanged at 49.4 in December amid divergent trends at the sector level. Though remaining only modest, growth of service sector business activity ticked up for the third month in a row to the highest since August. By contrast, manufacturing output posted a faster decline, which helped drag down the headline Manufacturing PMI from November’s five-month high of 44.1 to 43.4.

Commenting on the flash PMI data, Phil Smith, Principal Economist at IHS Markit said: “With the headline composite PMI holding steady at 49.4 in December, the flash data point to a weak end to a difficult year for the German economy. Manufacturing continues to weigh heavily on private sector output, with faster decreases in factory production and employment in December causing the manufacturing PMI to tick down for the first time in three months. Easing rates of decline in new orders and exports continue to provide glimmers of hope, however. The service sector remains resilient, with business activity rising at a stronger pace and business confidence perking up as well, though weak labour market trends are likely to be a restricting factor for the sector as we head into the new year.”

Financial markets are set for a “risk asset melt-up” in the first quarter of the new decade, according to Bank of America Corp.

As Brexit and trade war risks recede, and with the Federal Reserve and European Central Bank still adding liquidity, the outlook for the beginning of 2020 is bullish, strategists including Michael Hartnett wrote in note to clients.

“We continue to expect returns to be front-loaded in 2020,” the strategists said. Positioning is turning bullish and December’s global fund manager survey on Tuesday should confirm the positive sentiment, they added.

The strategists expect the S&P 500 to reach 3,333 by March 3 -- a 5% rise from Friday’s close -- and see the 10-year Treasury yield hitting 2.2% by Feb. 2, an increase of 36 basis points.

Global stocks climbed to record highs Friday after the U.S. and China agreed to a phase-one trade deal and the U.K. Conservative party won a parliamentary majority, clearing the path for the country’s exit from the European Union.

TD Research discusses GBP/USD and EUR/USD tactical outlook and sees limited scope for near-term gains.  

"The good news is that the worst may be over, but the downside is that GBP has priced in excessive optimism now. We think the fresh upside is limited but coupled with the easing of US/China trade tensions risk markets should benefit into year end. Together with a Fed that sees some optimism on the external environment, this backdrop reinforces the recent top in the broad USD. EURUSD spot is likely capped around 1.12 for now but we note that 3m call spreads (1.12/1.15) look quite attractive out of the gates in 2020,' TD adds.

Analysts at TD Securities think that Germany's manufacturing PMI can bounce a bit higher again in December, though with a smaller improvement than the outsized 2.0pt gain last month.

“We look for the PMI to rise to 45.0 in December (mkt 44.6), which would be its highest print since June, though crucially still well below the 50 mark. For France, we expect the services PMI to slip from 52.2 to 51.5 (mkt 52.1), as the strikes across the country weigh on sentiment.”

Asian economies need to focus on propping up their domestic economies as China’s slowdown looks like it’s here to stay, said the chief economist and head of research at Australian bank ANZ, Richard Yetsenga.

“For the region, it’s increasingly about having business models which fit a world where China is growing much less quickly, and where trade is much less easy than growth support. That means increasing domestic demand, and that means getting domestic financial systems right,” Yetsenga told CNBC.

Ten years ago, China began the structural adjustment as its economy grew at 12%, he said, noting it’s never gone back to that rate of growth.

“I think we all need to accept that China is slowing structurally — we use the word ‘structural’ and really, we mean ‘permanently,’” he said.

“My expectation is, we say goodbye to (6% growth), it’s very unlikely we ever get back to (6% growth). I think this is a permanent slowdown in China,” said Yetsenga.

Businesses in other Asian countries will need to adapt to an environment where China is growing less quickly and trade is more difficult, Yetsenga explained. If trade improves next year, that’s good news for Asian economies, he added.

The problem is that the financial systems in some countries haven’t been able to deliver domestic growth — and that’s “probably Asia’s key issue for 2020,” Yetsenga said.

According to Danske Bank analysts, markets will continue to watch US-China trade talks closely and any signals on the phase-one deal.

“Otherwise the euro area Flash PMIs for December will take centre stage today. The manufacturing PMI rose for the second month in a row in November and we look for a further increase in December as more signs of a global recovery are emerging. The US will also release preliminary PMI manufacturing and in contrast to ISM manufacturing, PMI has seen a lift in recent months. The regional Empire index will add a further piece to the business cycle puzzle. Following the landslide Conservative win, PM Boris Johnson is finalising his cabinet reshuffle and will appoint top ministers today, before outlining his government programme in the Queen's Speech on Thursday. After the GBP rally last week, further Sterling appreciation from here will likely require an improvement in the UK macro outlook as well. UK flash PMIs for December released today will give some clues whether the economy can shrug off its recent lethargy. Rest of the week focus turns to Riksbanken, which is expected to hike rates by 25bp and the Norges Bank meeting, where we look for a message of an extended period of unchanged rates. Both meetings take place on Thursday. Apart from PMIs today there are no big data releases on the global front this week.”

China and the United States should continue bilateral trade talks and work toward removing all existing tariffs, China’s National Bureau of Statistics spokesman Fu Linghui said on Monday.

Fu also told reporters during a briefing that China’s economic operations showed positive changes in November and reiterated that China can achieve its full-year economic growth target.

Westpac analysts point out that Australia’s budget surplus was cut by $21.5bn over four years as softer economic outlook hits revenues.

“The Federal government has sharply downgraded the fiscal outlook in its Mid-Year Economic and Fiscal Outlook (MYEFO), released today. In particular the forecast budget surpluses for 2020/21 and 2021/22 have been reduced from $11.0bn and $17.8bn to $6.1bn and $8.4bn respectively. The government has gone further and cut the wages forecast to 2.5% - no lift in wages growth from the 2019/20 forecast of 2.5% and in line with the Reserve Bank’s thinking. We estimate that the difference between our own forecast that nominal GDP growth in 2020/21 would be lowered to 3.0% in this document and the government’s forecast of 2.25% is explained about 50/50 between a weaker wages/ prices forecast and a lower profile for commodity prices – largely centred around coal. There are upside risks to the commodity price forecasts but we can understand why the government would be cautious around these forecasts in MYEFO - wanting to avoid a further fiscal downgrade when the 2020 Budget is announced on May 12.”

EUR/USD

Resistance levels (open interest**, contracts)

$1.1239 (5114)

$1.1217 (2569)

$1.1204 (3729)

Price at time of writing this review: $1.1137

Support levels (open interest**, contracts):

$1.1087 (4136)

$1.1044 (5494)

$1.0998 (3080)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date January, 3 is 53026 contracts (according to data from December, 13) with the maximum number of contracts with strike price $1,1050 (5494);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3621 (1615)

$1.3580 (982)

$1.3542 (3300)

Price at time of writing this review: $1.3386

Support levels (open interest**, contracts):

$1.3170 (1021)

$1.3128 (1104)

$1.3084 (827)

Comments:

- Overall open interest on the CALL options with the expiration date January, 3 is 19138 contracts, with the maximum number of contracts with strike price $1,3500 (3300);

- Overall open interest on the PUT options with the expiration date January, 3 is 26994 contracts, with the maximum number of contracts with strike price $1,2500 (2423);

- The ratio of PUT/CALL was 1.41 versus 1.14 from the previous trading day according to data from December, 13

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.