Friday 5th December: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.20 %, Shanghai Composite gained 2.10 %, Hang Seng rose 1.20 %, ASX down 0.60 %
  • Commodities: Gold at $1204 (-0.30 %), Silver at $16.43 (-0.90), Crude Oil at $66.50 (-0.50 %)
  • Rates: US 10 year yield at 2.25, UK 10 year yield at 1.99, German 10 year yield at 0.775

News & Data:

  • Japan Leading Index -1.6 %, Previous: 1.2 %
  • Australia AIG Construction Index 45.4, Previous: 53.0
  • Deputy Chief Cabinet Secretary Hiroshiege Seko: Will continue to pay close attention to currency moves
  • Seko: Will take measures to combat effects of weak JPY

Markets Update:

EUR/USD rallied yesterday as we didn’t get anything new from the ECB. Quantitative easing is a possibility and the bank is preparing it, but for now, it will maintain its “wait-and-see” stance. The short squeeze extended to 1.2450, but momentum quickly waned as it hit that level. EUR/USD traded in a 1.2370-90 range overnight, with flows light ahead of the NFP. 1.2275 and 1.2450 are now the key levels to watch.

GBP/USD continues to consolidate, but perhaps the NFP can finally bring the momentum needed to break the 1.5585 support level. Price action isn’t convincing for bulls as the pair continues to post lower highs and is unable to sustain strength above 1.57.

Meanwhile, it is early Christmas for USD/JPY longs, as the pair broke above 120.00 yesterday. After a dip to 119.35 post-ECB, it bounced and slowly marched back to 120. Asia mentioned large offers around 120.20, but it is unlikely to be a major obstacle after it has taken out this big resistance level. The charts suggest there is not much resistance now until 122.05 and then 124.00.

Upcoming Events:

  • 07:00 GMT – German Factory Orders (0.6 % m/m)
  • 10:00 GMT – Euro Zone GDP (0.2 % q/q, 0.8 % y/y)
  • 13:30 GMT – US Non-Farm Payrolls (230k)
  • 13:30 GMT – US Unemployment Rate (5.8 %)
  • 13:30 GMT – Canadian Employment Change (0k)
  • 13:30 GMT – Canadian Unemployment Rate (6.6 %)

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