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Higher-yielding commodity currencies paused from their earlier rallies but the market mood was still positive overall.

Crude oil and the Loonie got an extra kick higher on Alberta’s plans to trim output while the Greenback got another kick higher from upbeat manufacturing PMI.

  • Canadian Markit final manufacturing PMI up from 53.9 to 54.9
  • U.S. Markit final manufacturing PMI revised from 55.4 to 55.3
  • U.S. ISM manufacturing PMI jumped from 57.7 to 59.3 vs. 57.5 forecast
  • U.S. construction spending down 0.1% vs. projected 0.7% gain
  • Alberta to reduce oil production by 35K barrels per day
  • FOMC member Brainard: U.S. economy beyond full employment
  • Kudlow: China’s commitments on trade to start immediately

Major Events/Reports:

U.S. manufacturing PMI

As in the U.K. during the previous trading session, the U.S. is kicking off the new month with a fresh batch of PMI readings. The survey conducted by ISM yielded stronger than expected headline results for November.

The index surged from 57.7 to 59.3 to reflect a much stronger pace of industry growth versus analysts’ expectations of a drop to 57.5. Underlying data revealed that the prices component is down from 71.6 to 60.7, a steeper drop compared to the estimated dip to 70.1, but the sharp gain in new orders from 57.4 to 62.1 overshadowed this.

Production, inventories, and order backlogs also ticked higher. Also, the employment sub-index is up from 56.8 to 58.4 to signal faster hiring during the month, sending positive vibes ahead of the NFP release later this week.

Meanwhile, the final reading of Markit’s version of the manufacturing PMI for November was downgraded to 55.3 from the initially reported 55.4 figure.

Fed officials speak

A handful of FOMC members gave testimonies throughout the session, some of which were during the Janet Yellen Award for Excellence in Community Development ceremony.

FOMC member Brainard and current Fed head honcho Powell spoke about former Chairperson Yellen’s accomplishments during her term and also highlighted signs of economic strength. Powell also recognized the importance of the Fed’s community development staff  in carrying out the central bank’s responsibilities.

Prior to this, Brainard also had a speech at The Evolving Structure of the US Treasury Market conference but focused mostly on the Fed’s initiative to expand access to transactions data.

Fed official Kaplan, who is not part of the voting committee, warned that U.S. growth could slow next year and that he is focused on having a pre-determined rate path.

Risk-taking still supported

It looks like folks on Wall Street are still toasting to the positive trade-related developments over the weekend as they started the first day of the week and month with good gains.

  • Dow 30 index is up 287.97 points to 25,826.43 (+1.13%)
  • Nasdaq is up 110.98 points to 7,441.51 (+1.51%)
  • S&P 500 index is up 30.20 points to 2,790.37 (+1.09%)

According to White House economic adviser Larry Kudlow, the Trump administration expects swift action from China when it comes to trade promises made. In particular, government officials expect to see changes within a 90-day period starting on December 1.

Kudlow also reiterated that China should start lifting tariffs and non-tariff barriers, as well as reduce its 40% tariffs on autos, which the U.S. government expects to fall to zero.

Major Market Mover(s):

USD

The Greenback was able to extend its climb from the earlier session thanks to upbeat ISM manufacturing PMI and mostly positive trade-related remarks from Kudlow and Mnuchin.

USD/JPY advanced from 113.44 to 113.68; USD/CHF rose from .9961 to a high of .9996 but retreated to .9965; EUR/USD slipped to a low of 1.1319; GBP/USD fell from 1.2780 to a low of 1.2699 before pulling up, and AUD/USD retreated to .7348.

CAD

While its comdoll buddies paused from their ascent and even pared a few gains, the Loonie drew a bit more support from positive manufacturing PMI data from Markit.

Earlier market buzz on Alberta’s plans to curb production likely added to the oil-related Loonie’s gains, too.

USD/CAD fell to a low of 1.3166 but gave in to dollar strength as the session went on; CAD/JPY popped up to a high of 86.25; EUR/CAD dipped to a low of 1.4914; GBP/CAD is down to 1.6795, and AUD/CAD dropped to .9710.

Watch Out For:

  • 12:30 am GMT: Australian current account balance (deficit to narrow from 13.5B AUD to 10.2B AUD)
  • 3:30 am GMT: RBA monetary policy decision (How might this event turn out?)
  • 3:30 am GMT: RBA cash rate (no change from 1.50% eyed)