Ivan Delgado
Independent Analyst
What you need to know
Further evidence that the Republican tax cut bill will pass the US Senate, although the US Dollar is largely unimpressed as month-end flows cap upside.
US stock indexes keep making fresh record highs, with the S&P 500 briefly breaking through 2,650.00, while Dow Jones reaches 24k.
The risk appetite environment leads to the Japanese Yen and Gold as the main under-performers as a new month gets underway.
Cable is leading the FX pack with further sellers being badly squeezed through the 1.35 handle as talks over Brexit keep advancing.
Upcoming events on Friday
In Japan, we will get a bunch of economic indicators, which rarely if ever result in movements in JPY pricing.
The data in Japan includes Oct household spending, Oct inflation figures, both nationwide and in Tokyo, Oct jobs/applicants ratio, Oct unemployment rate, Oct Q3 business Capex and Nov Nikkei Mfg PMI, 53.8 prev.
In China, at 01:45 GMT we will see the Nov Caixin Manuf PMI final reading, expected at 50.9 vs 51.0 prev. Expect some minor volatility in the Australian Dollar on the release.
In the UK, Manuf PMI results will be published at 9.30 GMT, with expectations set for a slight improvement to 56.3 vs 56.3 prev.
Out of the Eurozone, we will see Manuf PMI readings from Spain, Italy, France, Germany, and the Euro area, which will represent an opportunity to assess the level of economic health in these respective economies. Overall, improved readings are expected.
Switzerland will also publish Manuf PMI data early in the European session, with expectations for an upbeat outcome of 62.6 vs 62.
Major market movers
EUR/USD appears to have resumed its bullish trend into a 3rd wave higher, with the printing of a bullish outside day shifting risks towards trend highs at 1.1950/1.20.
GBP/USD keeps on fire, with buyers achieving yet another milestone by finding acceptance and closing the NY session above 1.35. It communicates a healthy uptrend on lack of profit-taking.
USD/JPY has been on a vigorous rampage north this week as the exuberance in US stocks valuations and optimism over the passage of the Republican tax bill is factored in. Watch 113.00 as next upside target.
AUD/USD is about to re-test trend lows, once again failing to capitalize on the weakness seen in the US Dollar index. The high beta is gradually losing appeal amid global higher rates.
Extremely volatile Bitcoin price action, with wild swings of +/- 20% in the last 24h of trading.
What happened earlier?
US Oct Core PCE Price Index MoM came at 0.2%, which was in line with expectations, and 0.1% prev (revised to 0.2%). Meanwhile, the yearly reading saw 1.4% vs1.3% prev (revised to 1.4%).
US Oct personal real consumption MoM came at 0.1% vs 0.6% prev (revised to 0.5%).
US Oct personal income MoM came at 0.4% vs 0.3% exp and 0.4% prev.
US w/e initial jobless claims came at 238k vs 240k exp and 239k prev (revised to 240k) , the 4-week average stood at 242.25k vs 239.75k prev, while w/e continued jobless claims came at 1.957 mln vs 1.904 mln prev.
Canada's Q3 current account came at -19.35 bln vs -19.50 bln exp and -16.32 prev (revised to -15.59 bln).
In the OPEC meeting, Russia agreed on an oil cut extension until the end of 2018.
Fed's Quarles said that cryptocurrencies do create risks in financial stability.
According to a senior EU official, EU and Britain agreed on a settlement post Brexit.
Economi calendar
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