Early gains were eroded having seen an in-line CPI print but the weekend book-squaring turned sentiment to settle just under the weekly highs. The currency continues to decline with the Yen trading 113.50 for the majority of the session having rejected the 114 figure change earlier in the day. The Shanghai and Hang Seng indices closed better ( 0.5% and 0.6% respectively) despite the decline in the price of oil and gold. The PBOC set the Yuan rate at 6.9168, with the off-shore pushing the 6.9600 for the majority of the US trading session. Gold continued to drift eventually hitting the weekly support at $1179; it will be interesting where this trades next week given the support we are currently flirting with.
Europe is traditionally quiet on and/or after a US national holiday and today was no exception to that rule. The UK GDP was released bang-on consensus ( 0.5% Q/Q and 2.4% Y/Y) which after a busy week resulted in unchanged markets for cable, FTSE and Gilts. Although, as gilts had been hit so hard this week there was a little profit-taking ahead of the weekend. The DAX, CACA and IBEX were all small better (around 0.15%) which was a reasonable performance given the Euro bounce, the decline in oil and the US stock market registering even more contract highs. There were talks that Europe is considering/discussing a ‘Post BREXIT transition deal’ but only once Britain has triggered Article 50. Details are still very sketchy but the rumours are around a three-tier negotiations approach – more when we have some clarity.
This post was published at Armstrong Economics on Nov 25, 2016.
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