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Economic Calendar:

Thursday, 12th December 2019

  • German CPI (MoM) (Nov) Final
  • French CPI (MoM) (Nov) Final
  • French HICP (MoM) (Nov) Final
  • Eurozone Industrial Production (MoM) (Oct)
  • ECB Deposit Facility Rate (Dec) / ECB Interest Rate Decision (Dec)
  • ECB Press Conference

Friday, 13th December 2019

  • Spanish CPI (YoY) (Nov) Final
  • Spanish HICP (YoY) (Nov) Final

The Majors

It was a mixed day for the European majors on Tuesday, with the CAC40 rising by 0.18% to buck the trend on the day. The DAX30 and EuroStoxx600 ended the day with losses of 0.27% and 0.26% respectively.

News of a possible delay to 15th December tariffs provided limited support as uncertainty over the prospects of a phase 1 agreement continued to linger.

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The U.S administration reportedly called for a ramp-up in spending on U.S agri in exchange for a delay to the 15th December tariffs. According to reports, the U.S President has demanded a hard line of US$50bn spending on soybeans and pork.

Trump’s focus on farming is not too surprising with the 2020 Presidential Elections less than a year away…

In spite of the talk of a possible delay to tariffs, members of the U.S administration continued to contradict each other at the start of the week, however.

The Stats

It was a relatively busy day on the Eurozone economic calendar on Tuesday. Key stats included the ZEW’s December economic sentiment figures from Germany and the Eurozone.

According to the latest ZEW figures,

Germany’s ZEW Economic Sentiment Index rose from -2.1 to 10.7 in December. Economists had forecast a rise to 1.1. The ZEW Current Conditions Index was also on the rise, with the index up from -24.7to -19.9. Economists had forecast a rise to -17.7.

For the Eurozone, sentiment figures were also positive, with the Eurozone ZEW Economic Sentiment Index increasing from -1 to 11.2.

French nonfarm payroll figures for the 3rd quarter had a muted impact on the majors on the day, Nonfarm payrolls increased by just 0.2% in the 3rd quarter. In the 2nd quarter, payrolls had risen by 0.3%.

From the U.S,

Economic data from the U.S had a muted impact, with stats limited to 3rd quarter nonfarm productivity and unit labor cost figures.

The Market Movers

For the DAX: It was a mixed day for the auto sector. BMW rose by 0.07% to buck the trend on the day. Continental, Daimler, and Volkswagen fell by 0.98%, 0.64% and by 0.43% respectively.

It was a bearish day for the banks, however, with Commerzbank and Deutsche Bank falling by 0.90% and by 0.92% respectively.

From the CAC, it was a mixed day for the banks. Credit Agricole rose by 0.08% to buck the trend on the day. BNP Paribas and Soc Gen fell by 0.98% and by 0.58% respectively.

Mixed sentiment towards trade weighed on the Auto sector. Peugeot and Renault fell by 0.85% and by 1.45% respectively.

On the VIX Index

In spite of the U.S equity markets closing out in the red on Tuesday, the VIX fell by 1.13%. Partially reversing a 16.45% bounce from Monday, the VIX ended the day at $15.7

Hopes of a phase 1 agreement pinned the VIX back on the day, as the markets took a more cautious approach ahead of tonight’s FOMC policy decision.

While the FED is not expected to make a move on interest rates, the FOMC economic projections will have a material impact on the majors…

With economic data from the U.S mixed last week, some uncertainty lingers…

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction.

The lack of stats leaves the majors in the hands of inflation figures out of the U.S and sentiment towards FED monetary policy.

Expect geopolitics to also influence, with trade and UK politics in focus on the day. For the majors, an optimal would be continued expectations of a Tory victory, a trade deal and for the FED to have an optimistic outlook on the U.S economy. That would need to be combined with plans to leave rates unchanged near-term…

In the futures markets, at the time of writing, the DAX30 was up by 4 points, while the Dow was down by 40 points.

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