Greater optimism over trade talks after rhetoric which was seen as more positive from President Trump.

Global equity markets regained ground on Thursday as the pendulum swung back towards optimism over US-China trade talks, but with major underlying uncertainty. Global equity markets reversed Wednesday’s losses to post net gains.

There was slightly greater optimism over trade talks after rhetoric which was seen as more positive from President Trump, although markets were very wary of background political manoeuvring as underlying pressures increased.

The dollar was hampered by weak ADP jobs data, but recovered from 4-week lows with EUR/USD selling above 1.1100.

Sterling advanced strongly as a break of key technical levels triggered stop-loss buying with EUR/GBP at 30-month lows and GBP/USD at 7-week highs.

The Canadian dollar strengthened to 3-week highs after a more hawkish than expected Bank of Canada policy statement.

US ADP data recorded an increase in private-sector payrolls of 67,000 for November, well below consensus forecasts of 140,000 while the October increase was revised down to 121,000 from 125,000.

The ISM non-manufacturing index declined to 53.9 for November from 54.7 the previous month and below consensus forecasts of 54.5. The business activity index declined sharply to 51.6 from 57.0 previously, but there was a recovery in new orders. Employment and prices both increased at a slightly faster pace on the month. The dollar was resilient after the mixed data with some reassurance from the new orders component, although overall dollar sentiment remained fragile.

EUR/USD settled near 1.1075 at the European close, little changed on the day as the dollar recovered from intra-day lows. The single currency was marginally higher on Thursday, although German factory orders declined 0.4% for November.

Sterling pushed higher in early Europe on Wednesday with a GBP/USD break of resistance just above the 1.3000 level triggering notable stop-loss buying and short covering. The UK final November PMI services index was revised up to 49.3 from the flash reading of 48.6. New business declined at the fastest pace since July 2016 and input price inflation also declined to the slowest rate for over three years.

The data overall, however, offered an element of Sterling support with all PMI releases above consensus forecasts which suggested the economy could be stabilising. Markets overall were more optimistic that the Conservative Party would secure a majority victory with little net change in opinion polls.

Economic Calendar

07:00German Factory Orders (M/M)(OCT)0.30%1.50%
10:00EU Economic Summit--
10:00Euro-Zone GDP (Q/Q)0.20%0.20%
10:00Euro - Zone Retail Sales (Y/Y)(OCT)-3.10%
10:00Euro - Zone Retail Sales (M/M)(OCT)0.10%0.10%
10:00OPEC Meeting--
10:00The Eurogroup Meeting--
12:45BoC Governor Member Timothy Lane--
13:30USD Trade Balance(OCT)-52.50B-52.50B
13:30CAD Trade Balance(OCT)-0.70B-0.98B
13:30USD Initial Jobless Claims-213K
13:30USD Continuing Jobless Claims-1.640K
15:00USD Factory Orders(OCT)--0.60%
15:00CAD Ivey PMI(M/M)(NOV)-48.2
21:30AiG Construction Index(NOV)-43.9
23:30JPY Household Spending (Y/Y)(OCT)7.80%9.50%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.