No progress in trade talks
Markets continued to monitor US-China trade developments during the week.
The main focus tended to switch to Hong Kong as President Trump signed a Bill into law which backed civil rights for Hong Kong citizens. There were concerns that the Chinese authorities would see this as a provocation and decide against signing a US-China trade deal.
The immediate Chinese response was limited, although there were also concerns over the issue of existing tariffs with no evidence that talks had secured an agreement.
Data releases were mixed over the week with a fourth successive decline in consumer confidence while there was a stronger than expected reading for durable goods orders which suggested a net improvement in business confidence.
Overall sentiment towards the economy remained slightly stronger and the US also became a net oil exporter for the first time in 70 years.
There was little change in interest rate expectations with no change expected in December, although confidence in further rate cuts in 2020 faded slightly.
The latest business confidence data indicated a slight improvement for November, but economic developments had little overall impact.
One key opinion poll suggested that the Conservative Party would secure a comfortable majority in the December 12th General Election which pushed Sterling higher as it strengthened to 6-month highs against the Euro.
Other surveys, however, suggested that the Conservative lead was narrowing which generated some caution over the outlook. If the Conservatives fail to secure a majority, there will be renewed Brexit uncertainty and turbulence and Sterling lost some ground over the weekend.
German IFO data indicated a slight recovery in business confidence with the improvement led by retailers.
The latest Euro-zone inflation data reported an increase in the headline rate to 1.0% from 0.7% and an underlying rate of 1.3% from 1.1%. Although the underlying rate equalled the highest level for over six years, markets continued to expect that the ECB would maintain extremely low interest rate for an extended period.
Chinese PMI business confidence data was stronger than expected with the manufacturing index strengthening to 50.2 from 29.3 and the strongest reading since March 2019.
The data offered some relief over the economic outlook, although the central bank remained very cautious over the outlook and underlying reservations continued.
Canadian GDP data was close to market expectations with little net impact.
The New Zealand dollar was boosted by a significant recovery in business confidence and strong reading for third-quarter retail sales.