Technical & Fundamental Oil Reports Specialists

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All bets on divergence

Published Wednesday, December 2nd, 2015

D stands for Draghi and divergence, a combination the market is betting heavily on. Mario Draghi is carrying a very full backpack with tools to do whatever it takes to save the euro, promote growth and stimulate inflation. He cannot say that he has succeeded in any of these aims so far. There will be another euro crisis, growth is mediocre and inflation elusive. Expectations are so high that there is a danger he will disappoint tomorrow with tweaks rather than the major changes the market is banking on.

The eurozone final manufacturing PMI number for November came in at a 19-month high of 52.8 – but progress is very slow and it tells us more about how bad things were than about how good they are now. China factory activity is at a three-year low and the ISM manufacturing number for the US came in at 48.6, its lowest level since 2009 and the first time for three years it has been below 50. JPM’s global manufacturing PMI for November is at an unimpressive 51.2 from 51.3 in October. If Draghi only fiddles at the edges and the non-farm payrolls are borderline on Friday the currency markets will go into a frenzy.

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Posted by David Hufton