Global Markets:
- Asian stock markets: Nikkei fell 2.59% Shanghai Composite fell 3.79%, Hang Seng fell 2.28%, ASX200 fell 0.40%
- Commodities: Gold at $1064.10 +0.28%, Silver at $13.87 +0.45%, WTI Oil at $37.75 1.97%, Brent Oil at $38.00 +2.07 %
- Rates: US 10 year yield at 2.27% UK 10 year yield at 1.96%, German 10 year yield at 0.62%
News & Data:
- [BREAKING] China Caixin Manufacturing PMI (Dec): 48.2 (exp 48.9 prev 48.6)
- South Korea Nikkei Manufacturing PMI (Dec): 50.7 (prev 49.1)
- Japan Nikkei Manufacturing PMI (Dec, F): 52.6 (flash 52.5)
- Japanese FinMin Aso: Confident That Virtuous Cycle Emerging In Japan Economy – BBG
- China SIC & CDB: China GDP To Grow 6.5% In 2016 — Sec News
- Singapore GDP SAAR (QoQ) Q4, A: 5.7% (exp 1.0% prev rev 1.7%) -Singapore GDP (YoY) Q4, A: 2.0% (exp 1.2% prev rev 1.8%)
- Mester: Stronger Dollar Reflects Views On US Growth Vs Abroad
- Holiday Data: US Case Schiller House Price Index (YoY) Oct: 5.17% (prev rev 4.85%) – Case Schiller HPI (MoM) Oct: 0.88% (prev rev 0.77%)
- Holiday Recap: Saudi Arabia Won’t Change Oil Production Policy – RTRS
Major currencies update: With the first ‘real’ trading day of 2016 kicking off, the FX market is seeing decent activity in the Asian session, with risk trading to the downside as Asian equities sell-off strongly. The offshore-yuan (CNH) for one, has sold off to a fresh 5-year low at 6.60 versus the USD, with USD/JPY falling sharply 119.70 from a daily high 120.45. Some market participants suggest that current selling is stemmed from further fears of a China contraction with the Caixin Manufacturing PMI falling to 48.2 from a previous figure of 48.6. An additional possible factor adding to the current risk-off trade is the geopolitical rift associated with Saudi Arabia cutting off all diplomatic links with Iran by the foreign ministry. The tensions are thought of to stoke fears of supply disruption and doubt in regards to Iran’s plans to export oil into the market, when Western nation sanctions are lifted, causing a rally in Crude Oil prices. One should be cautious to attribute a narrative so early on to the year however. Notable levels at the moment for the USD/JPY for resistance are seen at 120.20 and 120.60, and with next support in sight at the 119.00 figure. The AUD and NZD have also fallen prey to the early risk-off trading, falling strongly from opening prices of 0.7282 to 0.7230 and 0.6825 to 0.6750 respectively. Resistance for the Aussie stands at 0.7330, with support siting at 0.7100. In the case of the NZD/USD, nearby resistance is located at 0.6828, with the next major support at the 0.6700 figure.
With strong moves seen in Asian FX, The euro and cable remain relatively muted, with the Euro currently trading at a spot price of 1.0873, trading slightly above the opening price, after a brief 30 pip move down. During August 2015’s turmoil, the Euro traded northbound on risk-aversion – such behaviour needs to be watched for should risk sentiment continue to deteriorate/improve. 1.0800 is seen as the current line of support in the pair, with resistance at 1.0990 and 1.10500. Pre-holiday trading, the GBP suffered considerably, with a minor fall today setting in a low at the 1.4700 figure. The pair remains muted with spot currently trading at 1.4725. Immediate resistance is seen at 1.4800, with support at 1.4650.
Upcoming Events:
- 9:30 BST – UK Manufacturing PMI
- 9:30 BST – UK Net Lending to Individuals m/m
- 15:00 BST – US ISM Manufacturing PMI
