Market rose today as on positive movement of of a a US-China trade deal. On Saturday, US National Security Advisor Robert O’Brien said that the initial trade deal with China could take place before the end of this year; however, the US negotiations will take into account protests in Hong Kong or the situation in other regions of the world where China operates. These comments are negative for the market, since linking the trade agreement with the Hong Kong problem can bring the US-Chinese confrontation to a new geopolitical level, especially since the PRC has been long accusing the US of meddling in internal affairs.
Today, oil prices are slowly being corrected downwards direction. The price is influenced by opposite factors. On the one hand, the market hoped that a trade deal between the United States and China would be signed before the end of the year, which would reduce pressure on energy demand. On the other hand, there is a significant likelihood that protests in Hong Kong will negatively impact negotiations. White House officials have stated the need to take this issue into account in the treaty, while China accuses the United States of interfering in the country’s internal affairs. Also, according to the latest Baker Hughes report, the number of active oil rigs in the United States continued to decline and decreased from 674 to 671 units.
EUR is weakening against USD and GBP but is strengthening against JPY. European investors are focused on November Ifo business climate index data in Germany. The indicator rose from 94.7 to 95.0, which indicates the revitalization of German business and the possible exit of the economy from the recession threat. Ifo experts note that the German economy is currently sustainable, and its focus on consumers provides prospects for positive Christmas sales. Nevertheless, production is still declining, and the volume of industrial orders is insufficient to return the growth impulse to the economy.
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GBP is strengthening against its main competitors – JPY, USD, and EUR. GBP is growing amid the publication of UK CBI Retail Sales data. For November, the indicator unexpectedly changed from –10 to –3 points. Thus, the decline in the index slowed down significantly, and most retailers expect it to grow in December. According to experts, it may be caused not only by Brexit uncertainty but also by the desire of consumers to accumulate funds for the holidays, so there is hope for positive Christmas sales and a revival of the economy.
JPY is weakening against its main competitors – EUR, GBP, and USD. Due to a lack of significant economic releases, JPY is trading under the influence of external factors. Today, the IMF lowered its forecast for the growth of the Japanese economy for this year the third time in a row, this time from 0.9% to 0.8%. Next year, GDP can grow by only 0.5%. The growth will be slowed by the increased risks of trade wars and the recession of the world economy.
AUD has ambiguous dynamics against JPY but is weakening against EUR, GBP, and USD. Due to a lack of significant economic releases, AUD is trading under the influence of technical factors. Investors continue to wait for news on the US-China trade talks, as well as preparing for tomorrow’s speeches by RBA head Philip Lowe and his deputy Guy Debelle. Debelle touches on issues of employment and wages of the population, and Lowe – unconventional measures of monetary policy. In their speeches, officials may hint at further steps of the regulator.