The next vote that could shake Europe - ITALEXIT

Daily Update

Yesterday’s Market

• EUR Markit PMI composite, Markit service PMI & Markit manufacturing PMI
• EUR EU financial stability review
• USD Continuing jobless claims & Initial jobless claims
• USD Durable goods orders and Durable goods orders ex transportation, Housing price index, New Home sales and Markit Manufacturing PMI
• USD U.S. FOMC minutes reports

Yesterday Explained

Assuming this week ends with a whimper and not a bang, everyone will be re-trenching ahead of next week's referendum in Italy on Dec 4, followed by ECB policy meeting on December 8. The vote is widely seen as determining Italian Prime Minister Renzi's political fate, and he may resign if a "no" vote prevails. Opinion polls show most Italians opposing the proposed constitutional changes, which economists say Italy desperately needs if it's going to streamline its government and spark growth.

In spite of positive reports coming from European Zone which showed that economic activity has expanded in the region, EUR failed to gain any positive upward movement. According to Markit preliminary November readings, the EU composite PMI is estimated to have been of 53.7 from previous 53.3, the strongest pace of growth so far this year. The German manufacturing sector expanded by less than expected, but posted a solid 54.4, while the Services PMI came in at 55.0, a six-month high.

Pound Sterling rose during the autumn forecast statement, as the UK's Chancellor Philip Hammond announced an increase in spending on those areas of the economy that can help boost productivity.

In the US Durable Goods Orders surprised to the upside, up for fourth month in the last five, jumping 4.8% in October. The preliminary Markit Manufacturing PMI came in at 53.9, beating expectations of 53.4. On the downside, weekly unemployment claims rose to 251K in the week ending November 18, while New Home Sales fell in October, down by 1.9%. However it did not impact the gains of USD.

Finally, the FOMC released the Minutes of its latest meeting, showing that most FED officials saw a rate hike appropriate 'relatively soon.' The market barely react to the news, as it did not add nothing new to what the market already knew. 

Today’s Market:

• EUR GFK consumer confidence survey and Gross Domestic Product
• EUR IFO Business climate, Current assessment & Expectations

Today’s Focus

In the morning, Germany will be releasing its GFK consumer confidence survey report that measures the level of consumer confidence in economic activity. This will be followed by Gross domestic product reports that measures the total value of all goods and services produced by Germany. The GDP is considered as a broad measure of the German economic activity and health.

Mid-day Germany will be releasing two key reports. IFO Business climate, Current assessment & Expectations are indicators of current conditions and business expectations in Germany. This presents an assessment of the business situation and short-term planning.