Tuesday 27th January: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei up 1.50 %, Shanghai Composite down 2.70 %, Hang Seng lost 0.80 %, ASX gained 0.80 %
• Commodities: Gold at $1280 (unch), Silver at $17.90 (-0.50 %), WTI Oil at $45.25 (+0.20 %), Brent Oil at $48.30 (+0.30 %)
• Rates: US 10 year yield at 1.82, UK 10 year yield at 1.505, German 10 year yield at 0.396

News & Data:

• Australia NAB Business Confidence 2.0, Previous: 1.0
• Australia NAB Business SUrvey 4.0, Previous: 5.0
• SNB’s Danthine: Says expected negative inflation to be temporary, still prepared to intervene in FX market
• SNB’s Danthine: Greek vote means some time before market finds balance, SNB now sees no need for more property market measures
• SNB’s Danthine: FX market hasn’t stabilized yet, ECB bond buys were seen as big risk
• Dollar Rises Before Fed Meets; Euro Holds Gain on Greek Relief (BBG)
• Asian Stocks Head for Two-Month High on Yen, Europe Optimism (BBG)
• Gold Extends Retreat to Lowest Level in a Week Before Fed Meets (BBG)

Markets Update:

EUR/USD recovered somewhat yesterday after traders who were betting that the Greek election results will spark flows into safe-haven currencies had to cover their positions. The pair had an impressive intraday rally from the 1.1095 low up to 1.1295, but the downtrend remains very well alive. It failed to close above the key 1.1285 resistance level and leveraged names were again sellers once Tokyo opened. EUR/USD hit a low of 1.1230 in Asia and traders will now be looking at 1.11 and 1.1285/90 as the pivotal support/resistance areas in the near-term.

GBP/USD broke above 1.5050 and finished the day around 1.5080. There is a good chance of a short squeeze up to 1.52 should we see a better than expected GDP release today. Otherwise, we could see last week’s low of 1.4950 being tested very soon. USD/JPY continues to consolidate and the best strategy remains to fade the extremes on each side of the range, which are 119.00-20 and the 116.80-90 support area. AUD/USD recovered to 0.7950 overnight, while NZD/USD remains heavy ahead of the RBNZ meeting tomorrow. The market expects that the bank will leave rates unchanged, but also an increased dovish tone in its statement.

Looking ahead, the main events of the day will be the UK GDP release at 09:30 GMT and the US Durable Goods Orders at 13:30 GMT.

Upcoming Events:

• 09:30 GMT – UK GDP (0.6 % q/q, 2.8 % y/y)
• 13:30 GMT – US Core Durable Goods Orders (0.6 %)
• 13:30 GMT – US Durable Goods Orders (0.5 %)
• 14:45 GMT – US Services PMI (53.8)
• 15:00 GMT – US CB Consumer Confidence (95.1)
• 15:00 GMT – US New Home Sales (2.7 %, 450k)
• 15:00 GMT – US Richmond Manufacturing Index (6.0)

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