Wednesday brings a day packed with fundamental report publications. First of all, Japan published its latest trade balance (for November), which was worse than forecasted.
Reports on the inflation rate in the United Kingdom came next. All three readings were worse than expected, with the monthly rate falling below zero in November. UK PMI reports were mixed, with the services sector predictably taking a hit from the most recent lockdowns, dragging the composite PMI down with it.
PMI reports from the eurozone were better all around, exceeding the forecasts. However, the eurozone’s composite PMI, as well as Germany’s services report were both under 50, which indicates a contraction in the growth of the economy.
On account of the positive data from Europe, the ECB will no longer prohibit banks from paying dividends, though it still advises them to wait until Q3 of 2021 at least.
Later in the day we expect inflation rate reports from Canada, as well as retail sales and PMIs from the United States. In addition, we are also going to hear from the European Central Bank, the Federal Reserve, and the Bundesbank today.
Some of the publications in the United States may play a role in the Federal Reserve’s monetary policy decision, which is expected today. The Fed has stated several times that more support for the economy is necessary but that its means are limited at this point. The central bank has tried to encourage the US government to proceed with its own stimulus plans, but so far Republicans have resisted all of the proposals.
Furthermore, the EU and the UK are still hard at work negotiating a trade agreement. Neither side has backed down, but today European Commission President Ursula von der Leyen said that a deal is possible, raising hopes that the last-minute extension to the talks is proving productive.
