Daily Brief

Trade and oil

There is no shortage of news and events for investors to ponder this morning: a Sino-American trade truce, major developments on the oil front and the omnipresent Brexit mischief. None of them are conclusive but all have weighty implications. The Commonwealth dollars have done best out of it.

The US and Chinese presidents, together with their delegations, had dinner together on Saturday, following which both sides revealed their interpretations of what had been agreed. Although the two versions did not quite match, the world was left with the impression that a truce had been called in the trade war. That impression was positive for risk-appetite in the Far East this morning, taking the Australian, Canadian and NZ dollars around 0.7% higher against the other majors. They are up by between a cent and a cent and a half against sterling.

Another meeting at the G20 summit involved Russia Vladimir Putin and Saudi Arabia's Mohamed bin Salman. The two decided to extend their agreement to limit oil production, paving the way for a broader price-support deal when OPEC meets in Vienna at the end of the week. A wild card was played yesterday by the premier of Alberta, who announced an 8.7% reduction in the province's output, and another by Qatar, which is pulling out of OPEC.

Another one gone

Theresa May lost another minister at the end of last week when Sam Gyimah resigned because her Brexit deal is "naïve" and "not in the national interest". The Labour party, meanwhile, confirmed that it would seek a vote of no confidence if the deal is rejected by Parliament next Tuesday.

Sterling was not unduly harmed by either of those developments: Mr Gyimah, a Remainer, had not played a prominent role in the Brexit drama, and Labour has been angling for a second general election since  it failed to win the last one.  

But with only eight days remaining until the Commons vote, sterling's situation is, to say the least, precarious. Assuming that the prime minister is on the losing side (and many make that assumption - the odds against her success are around 6/1) it is wholly unclear what might happen next.

Data flow

The barrage of data on Thursday and Friday is followed by another today, principally made up of the finalised purchasing managers' index readings from Europe and North America. Those at the end of last week had little direct impact on sterling; today's might.

Most of China's PMIs are already done and dusted. Not surprisingly in view of the trade war, they were softer on the month. German retail sales disappointed on Friday with a 0.3% monthly decline and Euroland inflation slowed to a provisional 2.0%. Canada's economy expanded by an annualised 2.0% in the third quarter.

Japan's manufacturing PMI improved from 51.8 to 52.2 in November and Britain is forecast to strengthen from 51.1 to 51.5 this morning. As for the rest, most are expected to be unchanged or lower on the month. Tonight the Reserve Bank of Australia is expected to keep its Cash Rate benchmark steady at 1.5%.