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Cyber Monday was a really busy one as volatility picked up and riskier assets like stocks and commodities managed to pocket gains. However, some of these risk-on winnings had to be returned when Trump’s remarks on tariffs renewed trade concerns.

  • ECB head Draghi: Recent economic data was weaker than expected
  • Draghi: Slowdown may be temporary but stimulus still needed
  • Draghi: World growth momentum slowed considerably
  • New Zealand trade deficit narrowed from 1.6B NZD to 1.3B NZD vs. 0.85B NZD expected shortfall
  • U.S. President Trump: Expects to raise tariffs on China

Major Events/Reports:

Draghi’s testimony

ECB head Draghi was his usual downbeat self during his speech before the European Parliament Economic and Monetary Affairs Committee in Brussels.

Draghi acknowledged the slowdown in the euro zone and the world economy, leading many to think that the central bank might not be tightening anytime soon. He mentioned:

“The data that have become available since my last visit in September have been somewhat weaker than expected.”

However, he also suggested that some of the slowdown may be temporarily spurred by one-off factors and that there is good reason to anticipate that underlying inflation will pick up. Still, he said that these uncertainties require patience and that significant stimulus is still needed for now.

Risk appetite picks up

Wall Street traders seemed to be in the mood to shop for good bargains, allowing equities to make strong rebounds off their earlier declines.

  • Dow 30 index is up 354.29 points to 24,640.24 (+1.46%)
  • S&P 500 index is up 40.89 points to 2,673.45 (+1.55%)
  • Nasdaq is up 142.87 points to 7,081.85 (+2.06%)

Crude oil also closed in the green while gold shed some of its safe-haven gains.

  • The precious metal dipped to $1,222.69 per troy ounce (-0.04%)
  • WTI crude oil ticked higher to $51.70 per barrel (+2.54%)

POTUS renews trade tensions

In usual Trump fashion, the U.S. President threw cold water on hopes that they could cool trade tensions with China as he said in a WSJ interview that he expects to raise tariffs instead.

This comes ahead of a highly-anticipated meeting between him and Chinese President Xi JinPing during the G20 Summit in Argentina. Trump said:

“If we don’t make a deal, then I’m going to put the $267 billion additional on.”

Note that businessmen from both countries are keeping their fingers crossed that the leaders could agree to suspend the planned Jan. 1 increase in tariffs on $200 billion in imports from China from 10% to 25%. However, Trump mentioned:

“The only deal would be China has to open up their country to competition from the United States. As far as other countries are concerned, that’s up to them.”

He even hinted at tariffs on laptops, iPhones, and their components imported from China, which might put the burden on consumers as companies would likely pass on the additional costs. To this, Trump responded:

“What I’d advise is for them to build factories in the United States and to make the product here.”

Major Market Mover(s):

EUR

The euro dipped slightly on Draghi’s not-so-upbeat tone as this led some to worry that the ECB would take longer to hike or even rethink the end of its asset purchase program next month.

EUR/USD retreated from 1.1356 to 1.1334; EUR/JPY is testing support at 128.50; EUR/GBP fell from .8861 to .8845, and EUR/CHF slipped to 1.1315.

Commodity Currencies

The comdoll bunch had a positive run for the most part of the session but most of the gains were unwound on resurfacing trade worries.

AUD/USD turned from .7258 to a low of .7222; NZD/USD dropped from .6812 to .6774; USD/CAD ticked back up to the 1.3250 area; AUD/JPY fell back to the 82.00 level; EUR/AUD bounced to a high of 1.5702, and GBP/NZD is back up to the 1.8900 mark.

Watch Out For:

  • 5:00 am GMT: BOJ core CPI y/y (another 0.5% reading expected)