Macro Roundup (Dec 13)

SHANGHAI, Dec 13 (SMM) – This is a roundup of global macroeconomic news last night and what is expected in the day ahead.

Last night

The US dollar dropped to its lowest in more than five months against its rivals, reversing gains from Thursday’s rally, as risk appetite returned on reports that China and the US are close to the signing of a “phase one” trade deal.

US President Trump reportedly has agreed to a limited trade agreement with Beijing. Trump said in a tweet earlier in the day both sides were getting “very close” to a “big deal.”

As part of the deal, the US would scrap additional levies set to take effect on Sunday and reduce existing levies on Chinese goods by up to 50% on $360 billion worth of imports, according to multiple reports.

The British pound surged after an exit poll showed the UK’s Conservative party winning a big majority in Parliament, giving Prime Minister Boris Johnson a clear path to move forward with his Brexit plans.

LME base metals, except for lead, drifted higher on Thursday. Zinc added 1.5% to lead the gains, nickel rose 1.2%, aluminium advanced 0.7%, tin climbed 0.6%, and copper gained 0.3%.

The SHFE complex traded mixed overnight. Zinc gained 0.6%, nickel increased 0.2% and lead inched up 0.1%, while aluminium dipped 0.1%, tin shed 0.3% and copper fell 0.7%.

The European Central Bank maintained its ultra-easy monetary policy at Christine Lagarde’s first meeting in charge on Thursday, after the US Federal Reserve held rates steady at its last policy meeting of 2019 on Wednesday and signaled that rates would remain accommodative with no hikes expected in 2020.

On the data front, the eurozone industrial output declined by 0.5% month on month in October and was down 2.2% from the same period last year, official EU statistics revealed on Thursday.

US producer prices were unchanged in November as increases in food and gasoline prices were offset by declining costs for services, said the Labor Department said on Thursday. The flat reading in producer price index for final demand last month followed a 0.4% surge in October.

In the 12 months through November, the PPI gained 1.1%, matching October’s rise, which was the smallest increase since October 2016.

Day ahead

The outcome of Britain’s general election and US-China trade news are key events to watch today, while the US will publish its import prices and retail sales data for November.