A bit of risk-taking returned to the financial markets as Trump administration officials suggested that a trade deal with China might still be possible.
The dollar was able to stay supported since cooling trade tensions would likely be beneficial for U.S. businesses and economic growth. Meanwhile, worries on German auto tariffs continued to weigh on the shared currency.
- U.S. CB consumer confidence index down from 137.9 to 135.7 vs. 136.2 forecast
- U.S. house price index rose 0.2% vs. projected 0.4% gain, 0.2% previous
- S&P/CS Composite HPI up 5.1% vs. projected 5.3% increase
- White House economic adviser Kudlow: “Good possibility” that U.S. could reach trade deal with China
- Kudlow: China would have to meet “certain conditions” for agreement
- Source: U.K. gov’t to allow Parliament to amend Brexit deal
- API crude oil inventories up by 3.453M barrels vs. 0.77M expected
Trade optimism from Kudlow
Higher-yielding assets were off to a shaky start during the session after coming off a risk-off run earlier on. Frowns turned upside down, however, when White House economic adviser Kudlow sounded optimistic about the Trump-Xi meeting in the G20 summit.
He mentioned that there is “a good possibility” that a trade deal can be made with China. However, he added that would have to meet “certain conditions” on trade.
Note that markets were previously reeling from Trump’s announcement of his plans to push through with more tariffs on China, so Kudlow’s remarks led to a sigh of relief.
- Dow 30 index is up 108.49 points to 24,748.73 (+0.44%)
- Nasdaq is up 0.85 points to 7,082.70 (+0.01%)
- S&P 500 index is up 8.75 points to 2,682.20 (+0.33%)
Gold once again shed some of its earlier safe-haven gains while crude oil managed to tick higher.
Brexit deal amendments?
Word on Downing Street is that PM May gave in to demands from MPs to amend the Brexit draft deal (which has already been approved by the EU, mind you) before the crucial vote next month.
As reported by Bloomberg, a source revealed that No. 10’s team is backpedaling on their push to prevent the House of Commons from changing the terms of the transition deal. Ugh, this means they could be back to the drawing board!
According to the same official speaking on the condition of anonymity, the “Meaningful Vote” festivities will kick off with five days of eight-hour debates on December 4. After a quick weekend break and maybe a bit more drama to start the following week, voting will commence on December 11 7:00 pm GMT.
Now each vote will take around 15 minutes since it could comprise their take on “a series of amendments to the government’s motion, likely to include calls for another referendum, or for the government to seek a customs union with the European Union.”
Of course these plans are still to be finalized (Maybe they’ll vote on it, too) but it’s worth noting that roughly a hundred MPs have publicly committed to voting against the Brexit deal. Meanwhile, PM May’s schedule is packed as she goes on a national campaign to rally support for the deal.
RBNZ Financial Stability Report
Before the closing bell tolled, the RBNZ released its Financial Stability Report, which acknowledged that risks to the country’s financial sector are easing.
While the document reiterated that risks and vulnerabilities remain, particularly when it comes to market volatility due to global geopolitical tensions, the central bank shared plans to ease loan-to-value restrictions. This reflects better confidence in improving household lending.
Furthermore, the RBNZ stated:
If banks’ lending standards are maintained we expect to further ease LVR restrictions over the next few years.
The report also indicated that New Zealand’s exposure to global risks is reduced by less reliance on short-term foreign funding.
Major Market Mover(s):
The scrilla was already drawing some support from safe-haven demand since the previous trading session, but it got a big boost from hopes of the U.S.-China trade war possibly ending soon.
USD/JPY advanced from 113.62 to a high of 113.84; EUR/USD slid lower from 1.1319 to a low of 1.1277; USD/CHF is up from .9976 to .9995, and AUD/USD is down from .7241 to a low of .7203 before pulling up to .7228.
AUD & NZD
After a starting the session on shaky footing, this comdoll tandem managed to pull off a strong finish as potentially easing trade troubles also spelled good prospects for commodity-driven economies.
The Kiwi was also lifted by a mostly optimistic RBNZ Financial Stability Report as the central bank planned on easing loan-to-value restrictions, reflecting confidence in improving financial conditions.
AUD/JPY recovered from a dip to 81.92 to close at 82.24; NZD/USD bounced off .6771 to .6792; EUR/AUD fell sharply from a high of 1.5672 to 1.5620; GBP/NZD tumbled to a low of 1.8746, and NZD/JPY pulled up to 77.32.
Watch Out For:
- 7:30 pm GMT: Australian construction work done q/q (0.9% expected, 1.6% previous)