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Positivity permeates markets

Published December 9, 2019

By Rhys Miles

 

Another week and another change in mood for the global markets. US Non-farm payrolls on Friday night came in a lot higher than expected at an increase of 266k well above the monthly average for the year of 180k. Unemployment fell to a 50 year low of 3.50% and US average weekly earnings rose a modest 0.20%.

The most favourable piece of news came from the US’s most hardened negotiator in Larry Kudlow who stated that “they are working around the clock”, “progress has been made” and that they are “getting close” to an agreement in respect of a Phase One trade deal with the Chinese. He did caution though that there is “no arbitrary deadline” on any deal putting some doubt on the supposed Dec 15 expectation of an announcement.

The equities markets were extremely favourable to the aforementioned and the Dow bounced 1.20% with European equities also experiencing a nice rally. At a time of year when the AUD has typically enjoyed good support it remains to be seen whether the remaining weeks of December and early January translate into a push through the strong resistance level of 0.6875 against the USD.

A strong data week this week may be the catalyst with the US Fed rate decision Thursday morning, Thursday night sees the European Central bank rate decision and of course the UK elections which, if the polls are correct, should pave the way for a smooth Brexit and possibly an enhanced “risk on” sentiment.