Macro Roundup (Dec 5)

SHANGHAI, Dec 5 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead.

Last night

The US dollar held firm above a one-month low against its rivals after a news report on Wednesday from Bloomberg that said the US and China were edging closer to a trade deal

The report, which cited people familiar with the talks, said the two countries were moving closer to agreeing on the amount of tariffs that would be rolled back in a so-called phase-one trade deal.

US President Donald Trump also said Wednesday that trade talks with China were going well, a day after he said that it might be better to wait until after the 2020 presidential election to conclude a trade deal with China.

Oil prices rose sharply on Wednesday, lifted by a larger-than-expected drop in US inventories and hopes of deeper production cuts from OPEC

US inventories decreased by 4.9 million barrels for the week ending November 29, the US Energy Information Administration said on Wednesday. That was more than three times the 1.4 million decrease that analysts polled by FactSet had been expecting.

LME base metals, except for aluminium and nickel, drifted higher on Wednesday. Zinc added 1.8% to lead the gains, copper advanced 1%, lead rose 0.9%, and tin gained 0.2%.

The SHFE complex performed similarly overnight. Zinc was also the best performer with a 1.4% gain, lead rose 0.7% and copper climbed 0.6%, while aluminium dipped 0.07%, tin fell 0.3% and nickel dropped 1.2%.

On the data front, US private payrolls increased by just 67,000 last month, according to an estimate Wednesday from ADP and Moody’s Analytics. The count was well below the 150,000 consensus from economists surveyed by Dow Jones and the lowest month since May.

US services sector activity slowed more than expected in November amid lingering concerns about trade tensions and worker shortages, which could revive fears about the economy’s health.

The Institute for Supply Management (ISM) said on Wednesday its non-manufacturing activity index fell to a reading of 53.9 in last month from 54.7 in October. A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of US economic activity.

Activity in China’s services sector, which accounts for more than half of China’s economy, accelerated to a seven-month high in November, as new business, especially new export business, picked up, a private survey showed on Wednesday.

The Caixin services purchasing managers’ index (PMI) rose to 53.5 last month, the quickest pace since April, from 51.1 in October. It has stayed above the 50-point margin that separates growth from contraction on a monthly basis since late 2005.

Day ahead

The eurozone will release its October retail sales and third-quarter gross domestic product (GDP) today, while the US will publish trade balance, durable goods orders and factory orders for October, Challenger job cuts for November and weekly unemployment claims.