The Pound received a welcome boost with a pick-up in optimism within the manufacturing sector helping to support a shaky start to December as a result of a perceived rise in support for Labour.

The most recent set of polls released over the weekend showed up a 5% jump in support for Labour with a potential fall of 2% for the conservatives. Although the potential gap is sitting at a substantial 7 point (ICM Poll) the news may leave some wary of a potential turn in trend in the build up to the elections, the uncertainty of which may well halt sterling’s progress following on from last week’s impressive gains.

Aside from politics, Wednesday’s Markit services PMI release will be worth monitoring. Given UK manufacturers have seen the fastest job cuts since 2012, the pressure might be on the services sector to counterbalance that negativity.

Trump Continues to Fight Election Results

US Dollar May Face Packed Final Weeks to 2019, on Trade Tensions

The US dollar could be in for a busy end to 2019 with global trade tensions once again due to come to the forefront. Investors may have been holding out for conclusions to Trump’s called investigation into the tech services taxes imposed by France and indeed the latest restructuring of Huawei’s access to US markets.

With updates expected on both fronts this week it will be interesting to see how the European commission and indeed China react to Trump’s retaliations. We have seen throughout this year how trade disputes have disrupted global trade sentiment, with the US dollar ultimately benefitting on both fronts as a result of it’s safe haven status.

Tomorrow’s Non-manufacturing PMI release may prove to be the next indicator to gauge the optimism within the US economy amidst this uncertainty as too will Friday’s key non-Farm Payrolls release.

EU announce potential MiFID II regulation changes

Euro Boosted by Upbeat Factory Data, German Politics Weigh

The single currency received a welcome boost from yesterday’s economic data releases with optimism from manufacturing sectors across the European bloc helping to appease the markets despite the ongoing political uncertainty in Germany.

Markit Manufacturing PMI came out marginally better than expected in Spain, Italy, France and Germany and could well provide some much needed support to the bloc in weeks and months ahead. The releases were particularly well timed given the focus on German politics with Merkel’s position under pressure and the possibility of a snap election or spit government continually rising since the Social Democrats (SDP) pushed their case for a renegotiation of the coalition deal.

As a result, it will be interesting to see if yesterday’s positivity filters through to tomorrow morning’s PMI release for the Services sector as a reverse in optimism could well provide a change in trend for euro exchange rates.

Aussie Rises as Chinese Factories Beat Forecasts, RBA May Cut in 2020

Optimism from China’s manufacturing sector has helped send the Aussie dollar higher. China’s manufacturing index surprised the markets with a 51.8 reading, setting a three year high and further bolstering the view of a positive long term outlook for the Chinese economy and their close trading relationship with Australia.

The RBA gave very little away overnight with regards to their forecasted cuts throughout 2020. Having held rates once again, investors are now looking out for clues as to the number of cuts throughout next year. Concerns around the Australian jobs market has long been watched by investors and the need for some form of quantitative easing from the RBA seems to be growing. As a result, upcoming economic releases could hold extra as any slow down in optimism might force the RBA to act sooner rather than later. Tonight’s Services PMI release for example is worth monitoring.

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