• Asia stocks were higher Wednesday morning; Nikkei 225 rising over 2%, ASX 200 up by 1.25% and Hang Seng Index around 1.36%. This was followed by the news of China to cut US car tariffs from the planned 40% to 15%, the same tax charge on car imports from other countries
• May traveled on Tuesday back to Europe to try and gain a few more concessions from the European side, in regards to the Brexit deal. It is rumoured that 48 letters of no longer supporting May have been sent. May to face a vote of no confidence on Wednesday between 18:00 GMT and 20:00 GMT.
• Canada grants bail by setting a $10million CAD bail for Huawei CFO, Meng Wanzhou, following charges of “improperly taking payments from Iran in violation of sanctions against the country”
• EU Ambassador states that technology transfers should be regulated as EU companies should not be obliged to transfer technology to gain access to the Chinese market
• US President, Trump, announced that he would intervene in the case against Huawei CFO if this could contribute to closing a trade deal with China
• New charges are filed against Malaysian former Prime Minister, Najib Razak, and former CEO of 1MDB, in relation to alleged tampering of the audit report and theft of billions of dollars from the fund
• Trump comments on the expected rise in interest rates from the Federal Reserve as a “mistake”, as Trump needs the flexibility of lower rates to support the trade war between the US and China
• Saudi Arabia convinced two dozen oil producers to cut production levels as part of a “Saudi first” policy
• France budget deficit to potentially increase as President Macron announces a plan to raise minimum wage by 100Euros ($114) a month and overtime will not be taxed, as well as a reverse on tax hike on pensions for those earning less than 2000Euros a month
• UK government to spend an extra £100million to support the renewable energy projects in Africa, as well as committing to invest £5.8billion in international climate finance by 2020

Asian overnight: Asian markets have enjoyed a bullish session overnight, as improved sentiment over US-China relations is helping drive a more positive outlook for risk assets. A Chinese reduction in tariffs on US car imports looks like the first in many steps, while the US seem to be softening their stance to the Huawei CFO who has been granted bail in Canada.

UK, US and Europe: Looking ahead, the eurozone industrial production release represents the only European event of note, while US CPI brings inflation issues back into the picture. Given the recent deterioration in energy prices, it comes as no surprise to see that the headline CPI reading is expected to decline this month. Finally, watch out for the crude inventories figure, which is expected to follow up last week’s surprisingly sharp decline with another negative reading this time around.

It's also worth looking ahead at tomorrow, when the European Central Bank's president, Mario Draghi, is expected to confirm an end to QE (quantitative easing) in the form of 2.6 trillion euros worth of bond buybacks. The process, echoed by many central banks such as the US Fed and the Bank of England, has been hotly debated within the eurozone where more stable northern states didn't want to take on the political risk of weaker southern areas. 

When it comes to energies, a warmer winter is expected to send LNG prices to a 6 month low, whilst forwards buying earlier this year - notably over summer - haven't helped. Whilst heating demand normally pushes the price action of energies up (as seen last year) it looks like some unsold cargoes are still looking for a home.

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

Source: Daily FX Economic Calendar

1.30pm – US CPI (November): CPI to rise 2.4% YoY from 2.5%, and 0.1% from 0.3% MoM. Core CPI to rise 0.2% MoM and 2.2% YoY. Markets to watch: GBP crosses
3.30pm – US EIA crude inventories (w/e 7 December): stockpiles to rise by 1.9 million barrels. Markets to watch: Brent, WTI

Corporate News, Upgrades and Downgrades

• Rolls-Royce expects earnings and cash flow for the year to be at the upper end of previous guidance. The firm’s restructuring remains on target, it added. 
• British American Tobacco said that it was on track to meet targets, as performance in combustibles and vaping offset weakness thanks to FX markets. 
• Superdry has issued a profit warning, saying that warm weather in November and December had hit performance, although first half pre-tax profit rose to £26.4 million from £9.1 million a year earlier. 
• Deliveroo to open its first customer-facing restaurant in Hong Kong
• Brandlogic, a clothing brand, launched a legal claim against Bentley Motors, for “badly damaging its business”
• Facebook evacuating buildings in Silicon Valley due to bomb threat, but later found no explosives in the building

Alfa Financial upgraded to hold at Berenberg
Rational upgraded to buy at HSBC
Siegfried upgraded to buy at Baader Helvea

DWS downgraded to underweight at JPMorgan
Man Group downgraded to neutral at JPMorgan
Salvatore Ferragamo cut to reduce at Kepler Cheuvreux
Metro Bank downgraded to neutral at Citi

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