December begins with crude oil still in rally mode building on Wednesday’s explosive gains as traders respond favourably OPEC’s agreement to cut production. A meeting with non-OPEC producers is planned for next week to nail down that side as well. Progress toward managing supply after a two year war over market share that depressed prices is being seen as a positive for the oil market regardless of the actual details. WTI is trading up 0.8% near the $50.00 level just below the top of the trading range that has been in place for the last six months. The big question for oil prices now is what level would be enough to bring shut-in US shale production back on stream.  This year traders have been capping the price just above $50.00, but some agencies have suggested lately that the tipping point could be closer to $60.00.

Stock markets around the world are trading mixed through the release of manufacturing PMI reports, the first reading on how economies have performed this month. The FTSE is down 1.0% on a soft reading out of the UK while the Dax is down 0.8%. Reports out of China and Japan were a bit better than expected helping the Nikkei to gain 1.1% and the Hang Seng to rise 0.4%. US index futures are trading down slightly as traders await US PMI figures later this morning and US nonfarm payrolls tomorrow. Traders will be looking for confirmation of yesterday&rsquo s positive ADP payrolls and Chicago PMI reports and more signs of a post-election surge. 

In currency trading today USD has slipped back slightly and is still showing signs of topping. Traders may look to upcoming data less for signs of whether the Fed will raise in December which looks like a lock and more about how many rate hikes could follow in 2017. Incoming Treasury secretary had nice things to say about Janet Yellen further indicating she is likely to finish out her term which ends in January 2018. GBP and EUR have capitalized on USD’s rally. CAD is also strengthening although so far gains appear light relative to the positive oil price and Canadian GDP tailwinds that have emerged this week. Canadian banks could be active again today with CIBC turning in strong earnings and a dividend increase while TD Bank met expectations. 

Corporate News

CIBC        $2.60 vs street $2.48, 2.5% dividend increase

TD Bank     $1.22 as expected

Economic News

Japan Q3 capital spending        (1.3%) vs street (0.4%) vs previous 3.1%
Australia commodity index        32.1% vs previous 16.0%
NZ QV house prices            12.4% vs previous 12.7%

UK Nationwide house prices        4.4% vs street 4.7%
Eurozone unemployment rate        9.8% vs street 10.0%
Italy GDP                1.0% vs street 0.9%

Manufacturing PMI Reports:

China official            51.7 vs street 51.0
China non-manufacturing    54.7 vs previous 54.0
China Caixin            50.9 vs street 51.0
Japan                51.3 vs previous 51.1
Australia            54.2 vs previous 50.9
India                52.3 vs previous 54.4

UK                53.4 vs street 54.4
Germany            54.3 vs street 54.4
France                51.7 vs street 51.5
Spain                54.5 vs street 53.7
Italy                52.2 vs street 51.3
Sweden            57.3 vs street 58.5
Norway                47.6 vs street 52.5
Poland                51.9 vs street 51.0
Greece                48.3 vs street 49.2
Russia                53.6 vs street 51.5 

Upcoming significant economic announcements include:

8:30 am EST        US jobless claims            street 253K
10:30 am EST        US natural gas                street (51 BCF)

9:00 am EST        FOMC Kaplan speaking

Manufacturing PMI Reports:

9:30 am EST        Canada                previous 51.1
9:45 am EST        US Markit            street 53.9
10:00 am EST        US ISM PMI            street 52.5
10:00 am EST        US ISM prices paid        street 54.5
10:00 am EST        US ISM new orders        previous 52.1


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