Friday 9th January: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei up 0.20 %, Shanghai Composite gained 0.75 %, Hang Seng rose 1.10 %, ASX rallied 1.50 %
• Commodities: Gold at $1210.90 (+0.20 %), Silver at $16.38 (-0.05 %), WTI Oil at $49.20 (+0.80 %), Brent Oil at $51.24 (+0.35 %)
• Rates: US 10 year yield at 2.011, UK 10 year yield at 1.653, German 10 year yield at 0.511

News & Data:

• Australia Retail Sales 0.1 %, Expected 0.2 %, Previous: 0.4 %
• China CPI m/m 0.3 %, Expected: 0.3 %, Previous: -0.2 %
• China CPI y/y 1.5 %, Expected: 1.5 %, Previous: 1.4 %
• China PPI y/y -3.3 %, Expected: -3.1 %, Previous: -2.7 %
• New Zealand Building Consents 10.0 %, Previous: 8.8 %
• Australia AIG Construction Index 44.4, Previous: 45.4
• Fed’s Kocherlakota: Unemployment rate remains elevated
• Fed’s Kocherlakota: Hike would only further retard pace of slow recovery in inflation
• Fed’s Kocherlakota: stimulus insufficient to hit inflation target
• Asian Stocks Extend Gains as Crude Rises; Dollar Falls (BBG)
• Dollar Halts Gain as Fed’s Kocherlakota Warns Against Rate Rises (BBG)
• Oil Extends Rebound Amid Speculation U.S. Shale Boom Is Slowing (BBG)

Markets Update:

Asian equity markets are mostly higher this morning, inspired by the Wall Street gains yesterday. In commodities, Gold and Silver are little changed and Oil has bounced, with WTI perhaps soon testing the $50 level again. In overnight news, Fed’s Kocherlakota made some dovish comments, warning that the Fed should not hike rates too early. Australian Retail Sales came in a bit weaker than expected, while Chinese inflation numbers arrived in line with expectations.

EUR/USD traded slowly higher in the Asian session, but the topside remains capped at 1.1820 intraday resistance so far. The pair is heavily oversold in the short-term and prone to a short squeeze anytime. However, we will likely see some consolidation ahead of the NFP instead of a major breakout on any side. The key levels to watch are 1.1750 and 1.19. Lack of data/news out of the UK made the GBP/USD mostly mimic the EUR/USD moves this week. However, we’ll see some data releases today in form of Industrial & Manufacturing Production and trade data. Option-related demand reported in front of 1.50, while key intraday resistance noted at 1.5150.

USD/JPY fell to a low of 119.15 in Asia after it failed to take out the 120.00 level yesterday. Dealers report solid bids in the 118.75-80 area, while key s/t resistance now at 119.90/120.00. Meanwhile, the commodity currencies extended gains overnight. AUD/USD is approaching the 0.8150 resistance level (Tuesday’s high), while NZD/USD is currently testing the upper side of the range.

Looking ahead, the UK data releases at 09:30 will be the main event in the European session. In the NY trading session, the focus will be on US employment data. For CAD traders, keep in mind that there is a fair amount of Canadian econ data today out as well. See the calendar below for further details.

Upcoming Events:

• 06:45 GMT – Swiss Unemployment Rate (3.4 %)
• 07:00 GMT – German Industrial Production (0.4 % m/m)
• 07:00 GMT – German Trade Balance (€20.7bln)
• 07:45 GMT – French Industrial Production (0.3 % m/m)
• 08:15 GMT – Swiss CPI (-0.3 m/m, -0.2 % y/y)
• 09:30 GMT – UK Industrial Production (0.2 % m/m, 1.6 % y/y)
• 09:30 GMT – UK Manufacturing Production (0.3 % m/m, 2.3 % y/y)
• 09:30 GMT – UK Trade Balance (-£9.40bln)
• 09:30 GMT – UK Non-EU Trade Balance (-£3.45bln)
• 13:15 GMT – Canadian Housing Starts (194k)
• 13:30 GMT – US NFP (240k)
• 13:30 GMT – US Unemployment Rate (5.7 %)
• 13:30 GMT – US Average Hourly Earnings (0.2 % m/m)
• 13:30 GMT – Canadian Employment Change (15k)
• 13:30 GMT – Canadian Unemployment Rate (7.0 %)
• 13:30 GMT – Canadian Building Permits (1.0 %)
• 15:00 GMT – UK NIESR GDP Estimate

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