CAC Slips on Brexit Worries

In the Tuesday session, the CAC is at 5355.80, down 0.64% on the day. On the release front, French Final Services PMI improved to 60.4, above the estimate of 60.2 points. Eurozone Final Services improved to 56.2, matching the forecast. On Wednesday, the Eurozone publishes Retail PMI.

French Final Services PMI looked sharp, punching above the symbolic 60-point level, its highest level since May 2011. This is indicative of strong expansion, as the service sector has been buoyed by strong customer demand and strong economic conditions. French service providers remain optimistic that activity in the sector will increase in the upcoming 12-month period. The French economy has rebounded in impressive fashion in 2017, and looks to wrap up the year on firm footing, as a strong manufacturing sector has triggered improved job growth.

Negotiations between Britain and the European Union appear to be back on track, after Prime Minister May essentially agreed to Europe’s demands over the Brexit bill, which could reach up to EUR 50 billion. Still, a breakthrough on the non-trade issues has been elusive. There were hopes that a breakthrough would be announced on Monday, following talks between Prime Minister May and European Commission President Jean-Claude Juckner, but the gaps on two issues remain, for now. One thorny issue is that of northern Ireland and its border. The UK will clearly not remain in a customs union with the EU, but Ireland is insistent that there not be a hard border with the North, while the DUP, which is propping up the May government, is strongly against any border between the UK mainland and Northern Ireland. The second issue is whether the European Court of Justice will have a role protecting European citizens in the UK. The EU is in favor of a role for the court, while many British lawmakers feel that such a move would impinge on British sovereignty. The EU holds a meeting on December 12, and May is anxious to wrap up the non-trade sticking points and move on to trade talks by that date.

Economic Calendar

Tuesday (December 5)

  • 3:50 French Final Services PMI. Estimate 60.2. Actual 60.4
  • 4:00 Eurozone Final Services PMI. Estimate 56.2. Actual 56.2
  • 5:00 Eurozone Retail Sales. Estimate -0.6%
  • 5:00 Eurozone Revised GDP. Estimate 0.6%

*All release times are GMT

*Key events are in bold

CAC, Tuesday, December 5 at 6:20 EDT

Open: 5382.50 High: 5398.05 Low: 5348.50 Close: 5355.80

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.