Financial markets looking to future economic events to lead the way
As we begin to wind down and turn to the final trading weeks of the year, financial markets will be leaving macro-economic releases on the sideline and will instead closely monitor upcoming key global event risks.
These are not limited to and include the highly-anticipated meeting between US President Trump and Chinese leaders at the G-20 summit this weekend in Argentina. Trade issues will have investors glued to their seats for potential headlines from this meeting. The next major risk, one week after, will be the OPEC meeting in Vienna followed by the UK Parliamentary vote on Brexit in approximately two weeks’ time.
These events are considered as massive potential risks for financial markets, and might encourage traders to stay on the sidelines until there is guidance on how these events are going to unfold. Over the interim, there is no disputing that the scheduled meeting between Trump and Chinese leaders to discuss prolonged trade tensions is the most serious risk for financial markets today.
A resolution to those trade tensions would be the best medicine that risk appetite and global equity markets can receive at this time.
However, if the meeting does not conclude with a positive ending then we can expect the risk of a renewed risk-off attitude from investors next week.
Focusing back on macro-economic releases, the upcoming trading week will be filled with key reports from the United Kingdom and the United States. Manufacturing PMI figures from the UK will be in focus on Monday followed by ISM Manufacturing PMI figures from the States in the afternoon.
Investors are seen keeping a very close eye on the UK Services PMI released on Wednesday which should provide insight into the health of the UK economy.
In the United States, there will be a special focus on the US jobs report on Friday. A blockbuster NFP figure coupled with signs of rising wage growth could revive expectations of higher US rates beyond December. With the Fed policy revolving around data dependency, the Dollar is seen displaying high levels of sensitivity to the pending NFP report.