• USD (USDIndex 93.50) cools a tad and again tests 4-week low (93.44). PMI’s biased to the up side but Powell talked taper but no rate rises yet, Democrats narrowed their differences on the $3.5 infra bill & Yellen talked new taxes. Yields hold up, Equities mixed on Friday, & FUTS are down. Big week for Earnings – Oil up again on supply concerns and gold is back to $1800.
• Evergrande – Re-started 10 building projects over weekend and announced a move away from real estate to wards EV production.
• US Yields (10yr closed higher at 1.665) & – now 1.6500%
• Equities mixed – USA500 -4.88 (-0.11%) at 4544 (NASDAQ –0.82%) – Big movers – SNAP -26.59% & INTEL -11.68%; Big Earnings misses, FB -5.05%, GOOGL & AMZN –3%, TSLA +1.75%  – USA500.F back to 4540.  Asian equities weaker.
• USOil up again on supply concerns & trades close to 7-year highs at $83.00 
• Gold very volatile Friday ($1782-$1813-$1793 on close) Back to pivot at $1800 now.
• FX markets – EURUSD 1.1650, Cable 1.3770, &   USDJPY – (after a strong day on Friday (113.40 low) now at 113.60.

Week Ahead   Earnings from 5 x tech giants (FB today), plus major European Banks. Policy meetings from the ECB, BoJ & BOC, economic data includes US Q3 GDP & PCE. Plenty of CB speak, the UK Budget and month end too.

European Open The December 10-year Bund future is up 23 ticks at 168.51. DAX and FTSE 100 futures are up 0.15% and 0.25% respectively. Inflation risks remained in focus as oil prices continue to climb higher while bottlenecks in supply chains lead to rising cost pressures. The combination already weighed on manufacturing PMIs last week and are likely also to depress the German Ifo confidence reading today, ahead of the ECB meeting on Thursday. Fed Chair Powell signalled on Friday, that inflation could stay higher for longer and that the taper is coming. The ECB by contrast has pushed the decisions on PEPP and APP programs back to the December meeting, which means this week’s ECB meeting will be watched mainly for the signals from Lagarde at the press confrence.

Today – German IFO and BoE’s Tenreyro. Earnings: Michelin, Facebook, Restaurant Brands. HSBC surprises with 74% rise in Q3 profit and $2bln buyback.

Biggest FX Mover @ (06:30 GMT) AUDJPY (+0.45%)  Recovering from a strong day run fro JPY last week. Up from 84.50 tlow on Friday to test 85.00 now.  Faster MAs aligned higher, MACD signal line & histogram rising,  RSI 51 & neutral. H1 ATR 0.189, Daily ATR 0.817.

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Stuart Cowell

Head Market Analyst

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