Market Review – Fundamental Perspective 11 December 2017

Global equity markets broadly rose last week amid economic data suggesting the ongoing global expansion is still on solid footing. US non-farm payrolls came in higher than expected at 228k indicating that employment momentum remains strong in the US.
USD has opened this week marginally softer against G10 and trading volumes have been muted. Meanwhile, Asian equity markets are largely higher as of midday local time.
This week is a busy week for the UK and the main focus is expected to fall on the EU Summit in Brussels starting Thursday. The EU Council is expected to agree with the recommendation by the European Commission that trade talks can begin given that sufficient progress has been made.
Barclays Research believes that “…the long-term trading relationship between the EU and the UK is far from clear, and moving on to the next phase of the negotiations would not, in itself, be a major boost for the UK, but merely a sign that negotiations remain on track…”.
On the data front, we get UK CPI on Tuesday as well as average weekly earnings and the unemployment rate on Wednesday but these are likely to be overshadowed by politics
GBPUSD remains in its 1.3220-1.3550 range for now. Meanwhile, EURGBP finds support at 0.8690 with short-term resistance around the 200 DMA at 0.8803.
A number of central banks will meet this week including the Fed (Wednesday), the BoE (Thursday) and the ECB (Thursday). The Fed is widely expected to hike rates (>90% priced) whereas the BoE and the ECB are likely to remain on hold.
In South Africa, Ramaphosa is expected to become the ANC president at the party conference on Saturday according to preliminary results which has fueled expectations that the February Budget could show an improved debt-to-GDP path but considerable risks remain.

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