Markets are entering December on a cautious tone. China’s PMI provided little comfort, falling to 50.3 with the HSBC PMI flat at 50. Reports from Black Friday shopping are mixed at best, while oil prices have dropped to fresh lows (WTI at $65.50 and Brent at $69.65). The core themes are: 1) strong U.S. growth juxtaposed against weak growth in Europe and a recession in Japan with vulnerable growth in China; 2) global disinflationary pressures building as oil prices collapse; 3) diverging central bank reactions; and 4) diverging FX outlooks, with the USD widely expected to rally, particularly against currencies like EUR and JPY. Today’s highlight is likely to come with both the Fed’s Dudley and Fischer (both voting doves) speaking at 12:15pm and 1:00pm EST, respectively.
Read the full report: FX Daily