NBP: Governor Refuses To Rule Out February Cut, Sees Terminal Rate At 3.50%

Rapid talks are set to get underway on the afternoon of Wednesday, 17 December, between EU member states and the European Parliament regarding the free trade agreement planned with Mercosur. Earlier, MEPs voted by a 431-161 margin in favour of inserting a 'reciprocity clause'. Coming at the behest of France, Italy, and Poland, the clause is intended to ensure Mercosur agricultural producers meet EU standards in order to not disadvantage European producers. 

• Lawmakers also backed the lowering of thresholds for the EU to investigate cases of suspected dumping. Originally, the EU would look into cases if imports of beef or poultry from a Mercosur country increased 10% within three years and if those products were priced 10% below comparable EU products. These thresholds have been lowered to 5%.
• The Council initially accepted the Commission's recommendations on the Mercosur FTA. The European Council summit on Thursday, 18 Dec is due to deliver final sign off before Commission President Ursula von der Leyen travels to Brazil over the weekend for the signing ceremony. However, this plan is now at risk.
• Before today's vote, France called for the entire process to be postponed until its concerns were addressed. Even if Paris now accepts the deal, it is unclear how the Mercosur countries (Argentina, Brazil, Paraguay, Uruguay) might react.
• RTE quotes an EU diplomat claiming, "If we don't sign Mercosur in the next [few] days, it will be dead...If we can’t agree on Mercosur, we don’t need to talk about European sovereignty anymore. We will make ourselves geopolitically irrelevant".

• RES 4: $70.86 - 76.4% retracement of the Jun 23 - Oct 17 bear leg  
• RES 3: $70.33 - High Jul 30
• RES 2: $68.86 - High Sep 26 and a key resistance 
• RES 1: $63.15/65.25 - 50-day EMA / High Oct 24 
• PRICE: $59.10 @ 14:48 GMT Dec 16 
• SUP 1: $59.06 - Intraday low   
• SUP 2: $58.92 - Low May 5
• SUP 3: $58.11 - Low Apr 9 and a key support
• SUP 4: $56.22 - 2.00 proj of the Jul 30 - Aug 13 - Sep 26 price swing 

A bearish theme in Brent futures remains present and the bearish start to the week reinforces current conditions. Note that MA studies are in a bear-mode condition. Key support and the bear trigger at $59.93, the Oct 20 low, has been breached. Clearance of this level confirms a resumption of the bear cycle and opens $58.92, the May 5 low. Key short-term resistance to watch is $65.25, the Oct 24 high. First resistance is $63.15, the 50-day EMA.

• MNI: US SEP BUSINESS INVENTORIES +0.2%; SALES +0.0%
• US SEP RETAIL INVENTORIES +0.4%