• Asian equities gained as investors weighed in comments from Federal Reserve officials and a possible breakthrough in US-China trade war. Shares in Hong Kong and China led the gains with the Hang Seng Index climbing 0.5% and the Shanghai Composite gaining 0.7%. 
• Oil crude was up with WTI gaining 0.9% to $52.02 a barrel after a US industry report signaled shrinking gasoline surplus. Concerns of sanctions to Russia following its sea clash with Ukraine and Saudi’s vow to cut production in December are also pressuring upwards historically low oil prices.
• Gold fell the most in two weeks and finally found support above $1210. The move was prompted by a stronger USD, and later today Powell’s speech could trigger more swings.
• The pound slipped 0.1% as UK Prime Minister Theresa May reportedly allowed lawmakers to vote on a series of potential changes in her Brexit plan. More uncertainty is expected ahead of the final MPs vote on the 11th December.
• US treasuries edged higher as markets await today’s Fed’s Powell speech to the Economic Club of New York. Fed Vice Chairman Clarida committed yesterday to support “some further gradual adjustment” in rates.  Fed watchers took the comment as a sign that the end of the current rate-hiking campaign could be close, but not immediate.

Asian overnight: Markets remain unperturbed by warnings from the US government over impending talks with China, as Asian markets close out the session overwhelmingly in the green. The Australian ASX 200 remained as the only major market in the red, with a rebound in crude prices not too little to help drive the index into the green. Chinese markets were the outperformer, with the G20 summit at least providing the possibility of a breakthrough. Should we see another failed attempt to find a resolution, we would simply be back at square one. 

UK, US and Europe: UK Prime Minister Theresa May dropped efforts to avoid lawmakers re-writing her Brexit deal. A series of potential changes in the plans could take place, among which a call for another referendum. Moreover, the Treasury will publish today an analysis on the long-term economic impact of Brexit on the UK which could prompt more resistance from the Parliament. As already almost 100 Conservative members of Parliament have publicly committed to not supporting the Brexit deal, May’s Brexit journey looks far from nearly completed. Meanwhile, the pound edged higher amidst hopes of a Brexit deal being ratified. 

From the US, expectations are growing ahead of Saturday’s dinner in Buenos Aires between Donald Trump and China’s Xi Jinping. Larry Kudlow, the US president’s top economic adviser, has clarified that Trump is ready to impose more tariffs if talks with China do not progress. As we are approaching a pre-election year, pressure is building on president Trump to yield results from his ongoing trade disputes. The market maintains a positive outlook on the meeting as the dollar held gains and tech shares gathered momentum.

Looking ahead, the preliminary US GDP reading for Q3 provides the first revision to the 3.5% figure released last month. With US-China trade talks due to take place at the end of the week, the US goods trade balance due out today certainly comes at an opportune moment, helping shape trade walks with China. Later on, we have US crude inventories and UK bank stress tests to contend with.

Economic calendar - key events and forecast (times in GMT)

Source: Daily FX Economic Calendar

12pm – German GfK consumer confidence (December): forecast to fall to 10.5 from 10.6. Markets to watch: EUR crosses

1pm – US GDP (Q3, 2nd estimate): growth to drop to 3.5% QoQ from 4.2%. Markets to watch: US indices, USD crosses

3pm – US new home sales (October): forecast to rise 2.2% MoM from a 5.5% drop a month earlier. Markets to watch: US indices, USD crosses

3.30pm – US EIA crude inventories (w/e 23 November): stockpiles to rise by 2.5 million barrels. Markets to watch: Brent, WTI

Corporate News, Upgrades and Downgrades

• On the Beach said that full-year pre-tax profit rose 24% to £26.1 million, while revenue rose 25% to £104.1 million. 
• RPC saw first-half pre-tax profit fell 5% to £154.4 million, while revenue was up 7% to £1.89 billion. 
• Senior expects ‘good progress’ for the full year, after trading in the first ten months of the year met expectations. 

Frey upgraded to buy at Kepler Cheuvreux
PSI upgraded to buy at DZ Bank
S Immo upgraded to buy at SRC Research

AstraZeneca downgraded to hold at New Street Research
Marks & Spencer cut to sector perform at RBC
Nostrum Oil & Gas cut to hold at Panmure Gordo

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