Good sentiment after a stream of data

13 December, 2016

Data released today confirms an economic stabilisation in China. The second-largest economy in the world remains resilient in the Q4 (data for November). Weaker yuan has benefited exports, factory prices rebounded diminishing a deflationary threat. Industrial production climbed 6.2 percent, retail sales and fixed-asset investment came above the expectations as well.

AUD is one of the weakest currencies among G10. The crucial piece of data was NAB November Business Conditions which came at 5 (prior reading at 7 revised from 6) and for Business Confidence the index came slightly higher at 5 (prior reading at 4). Business conditions index dropped for the second month in a row. The message for AUD was clearly negative, more in here.

Swedish inflation accelerated what is important ahead of the central bank meeting next week. It will be the final decision of the year. Riksbank has signalled that it stands prepared to add more stimulus as inflation has fallen short of the 2 percent target for more than half a decade.

We saw some good inflationary data from the UK which gave pound a boost. Headline inflation is the highest since October 2014. Office for National Statistics reports that core inflation( which excludes volatile food and energy prices) increased to 1.4 percent in November from 1.2 percent in October, faster than consensus at 1.3%. 

ZEW reports that the indicator of Economic Sentiment for Germany has remained unchanged at a level of 13.8 points  in December 2016. But the current economic situation in Germany has improved significantly. Index has grown by 4.7 points, the index now stands at 63.5 points. 

IEA has raised 2017 oil demand growth forecast by 110k bpd to 1.3m bpd. IEA says that before the agreement among producers, agency’s demand and supply numbers suggested that the market would re-balance by the end of 2017. But OPEC, Russia and other producers are looking to speed up the process.

The FOMC decision is just around the corner. The avalanche of views, opinions and expectations has already started and we have ours, of course, as well. We will detail them a bit later, though. A starting point to any analysis of this sort should be a look at a present situation and we have done it in here. 

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