Summary:

• European indices follow upbeat sentiment set by Asian stocks
• USD recovers against EUR and JPY awaiting tax plan vote in the House Representatives later today
• Soft retail sales from the UK didn’t smash GBP as they were still better than expected

European equities grew for the first time in eight sessions following optimism form Asia and benefiting from stabilising commodity prices. Moreover, USD managed to recover somewhat against EUR ahead of a vote in House Representatives on tax bill. In addition, the UK retail data show a first y/y decrease since 2013 but the figures were still better than gloomy expectation, thus GBP remained quite resilient. 

Although UK retail sales managed to beat the estimates in a year-over-year basis the published numbers were not reassuring to say the least increasing a drag on household expenditure in the last quarter of the year. The British pound has been quite muted as economists had looked for yet more gloomy prints. Nevertheless, the GBPUSD has managed to stay above a pivotal support line implying a possible bounce the upside.

In Asia almost all key equity markets advanced despite a red close on Wall Street. The Japan’s Nikkei (JAP225) rebounded by 1.46% and returned over a local support zone.Chinese stocks also moved up as Hang Seng SE (CHNComp) gained 1.06%, whilst Australian S&P/ASX200 (AUS200) posted a modest increase of 0.16%. European benchmarks started the session with strong gains, although the upbeat sentiment was quickly tamed. One of the best-performing markets was Spanish IBEX (SPA35) which added already over 1.1%. German DAX (DE30) gained almost 0.50%, whilst French CAC40 (FRA40) advanced by 0.60% and UK FTSE100 (UK100) was trading flat. 

The Australian dollar was marginally higher in early trading following the fairly upbeat labor market report which came overnight. Although an employment change missed the forecast (18.8k) vastly producing just 3.7k the breakdown of growth seems to be supportive of the AUD. First and foremost, full-time employment increased 24.3k while part-time slumped 20.7k. On the other hand we also got upward revisions to September as overall employment was revised up from 19.8k to 26.6k, full-time and part-time were lifted as well. On top of that, the jobless rate ticked down from 5.5% to 5.4%.

House of Representatives is set to vote on tax bill. However, it’s a formality and the Senat should have the last say. Investors will also focus on the US industrial data and speakers from central banks, including prominent figures from BoE.