24.12. Canadian economy shows easing for the first time in 8 months Canada's economic indicators unexpectedly fell in October amid a sharp decline in manufacturing and retail sales. According to Statistics Canada data, GDP in October fell by 0.1% compared with the previous month – to 1.975 trillion Canadian dollars ($ 1.5 trillion). This decline became the first in eight months. Analysts had forecast growth of 0.1% after rising 0.1% in September. In annual terms, the Canadian economy grew by 1.2%. The most negative impact on the country's economy had a decline in manufacturing (by 1.4%) and in retail trade (by 1.1%).
25.12. China says it is in close touch with U.S. on trade deal US President Donald Trump and President Xi Jinping of China announced that the first phase of a comprehensive trade agreement has already been concluded, and now the necessary documentation is being finalized and translated. Moreover, the heads of two countries plan to hold a ceremony of signing the first stage trade agreement. Foreign Ministry Spokesperson Geng Shuang also confirmed that the parties are in close contact and they effectively interact in resolving and discussing various issues. The signing ceremony will take place in early 2020. The representative of the Commerce Ministry of China said that details of the terms of the deal will be made public only after the formal signing of the agreement.
26.12. Oil is on the way to new highs Oil prices continue their upward movement. Growth is supported by expectations of a Washington and Beijing trade deal, as well as data on a decrease in US inventories. Futures for Brent crude this morning are trading at $67.40 per barrel. February quotes for WTI crude oil are $61.35 per barrel. According to the American Petroleum Institute data (API), US commercial oil inventories fell 7.9 million barrels last week. API is a private company that receives information from refinery operators, oil storage facilities and pipelines on a voluntary basis. However, these statistics do not always coincide with official data from the US Department of Energy. This data will be released this week on Friday. We also note that on Wednesday the market was closed in connection with the celebration of Catholic Christmas. The oil market continues to get support from the optimism about the trade agreement between the US and China. US Treasury Secretary Steven Mnuchin confirmed that an agreement with China will be signed soon. Analysts note that oil prices are likely to change little over the next year, as OPEC+ actions to reduce production will be balanced by production growth in other countries, and the prospects for demand are still unclear. Experts predict a rise in oil prices in the middle of the year amid rising demand from developing countries and OPEC+ measures.
27.12. Russian authorities are considering the possibility of exit from the OPEC + The head of the Ministry of Energy of the Russian Federation, Alexander Novak, said that the Russian authorities will soon consider the issue of a possible withdrawal from the OPEC+ agreement. Despite the effectiveness of the deal to reduce global oil production, A. Novak believes that Russia will need to gradually make a decision to exit in order to maintain market share and enable Russian companies to implement their promising projects. The minister also noted that the market responds very well to such agreements to reduce production: volatility has decreased, investment in the industry has returned, and current oil prices satisfy both producers and consumers. At the moment, the agreement provides for a reduction in production by 1.2 million barrels per day from the level of October 2018 until the end of 2019 and by 1.7 million barrels – in the first quarter of 2020.
30.12. Beijing authorities urged to abandon cryptocurrency trading Several municipalities in Beijing, including the Financial Supervision and Administration Service, the People’s Bank of China Business Administration Division, the Banking and Insurance Regulatory Service, and the Securities Market Regulatory Service, have called on businesses to abandon cryptocurrency trading activities. The regulatory authorities noted that some cryptocurrency platforms have already seriously violated the rules prohibiting ICOs issued in 2017. Moreover, the institutions called on Chinese companies to impede the promotion of cryptocurrency projects and platforms, as well as to report on all violations of the relevant rules. It is worth noting that such policy of the Chinese authorities is conducted in parallel with the development of a national cryptocurrency. As you know, the People's Bank of China is preparing to test the electronic payment system in digital currency (DC / EP) in the cities of Shenzhen and Suzhou. Seven state enterprises were selected as a platform for testing the digital renminbi: four commercial banks and three telecommunications giants (China Mobile, China Telecom and China Unicom). The pilot program will affect the field of transport, education, trade and medical services.
31.12. Experts predict global economic growth in 2020 Analysts positively assess the prospects for the development of the global economy in 2020. Economists expect the active phase of the US-China trade war to end and consumer spending to remain high, which will contribute to economic growth despite low investment in business. According to Goldman Sachs experts, the risk of a global recession will decrease and unemployment will drop to the lowest level since the Korean War. In 2020, the global economy will reach 2.25–2.5%, while the unemployment rate will reach 3.25% by the end of the year. Analysts also expect key Fed rates to remain unchanged. Regulatory officials made it clear that a significant and constant increase in inflation was needed before considering the issue of raising rates.
07.01. Gold rolled back from seven-year highs On Tuesday, the price of gold in Asia fell back from seven-year highs in the $1,582.59 area after tensions in the Middle East declined slightly. Earlier, the metal demonstrated skyrocketing amid the news of escalating tensions in the US and Iran after the assassination of Iranian General Qassem Suleimani by the US military. Today, gold prices fell to around $1,558.45 per troy ounce. According to experts, the reduction of geopolitical risks occurred due to the lack of an immediate response from Iran. In addition, some profit taking is observed in the markets. However, market participants continue to exercise caution in their actions. We believe that the conflict between the United States and Iran is at its starting point, so further measures by Tehran and Washington could significantly aggravate the situation.
08.01. US Senate Profile Committee approves USMCA Trade Agreement The United States Senate Committee on Finance has approved the U.S.-Mexico-Canada Trade Agreement Implementation Act (USMCA). The document was adopted by a majority vote (25 votes in favor / 3 against). A further trade agreement process will include a vote in the US Senate and the final signature of President Donald Trump. Previously, the agreement was approved by the House of Representatives. The revised agreement includes the rules for participants to access the domestic markets of the three countries, tariffs and some labor laws. The new standards are expected to enter into force in June 2020. Recall that work on revising the provisions of the North American Free Trade Agreement began in 2017. The parties faced many contradictions and conflicts during the negotiations between the USA, Canada and Mexico.
09.01. U.S. weekly jobless claims fall, ranks of unemployed swelling According to the US Department of Labor, the number of Americans applying for unemployment benefits for the first time fell to the lowest level in 5 weeks. The indicator decreased by 9 thousand – up to 214 thousand. A week earlier, the number of applications was 223 thousand. Analysts predicted that the number of applications will decrease by only 3 thousand -– up to 220 thousand. The average number of applications for unemployment benefits over the past 4 weeks (a less volatile indicator) decreased from 233.5 thousand to 224 thousand. The number of people continuing to receive unemployment benefits increased by 75 thousand – to 1.803 million, which was the highest since April 2018.
10.01. U.S. job growth slows in December, unemployment rate steady at 3.5% According to the Labor Department data, the U.S. economy has shown less job growth outside the agricultural sector (Nonfarm Payrolls), as the jobs market cooled at the end of 2019. The number of new jobs rose only 145 thousand in December, while analysts had expected an increase of 164 thousand. The unemployment rate remained stable at 3.5%, as predicted. The average hourly earnings for the month rose 0.1% compared with growth expectations of 0.3%.
