Monday 5th January: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei up 0.20 %, Shanghai Composite gained 2.75 %, Hang Seng rose 0.40 %, ASX gained 0.30 %
• Commodities: Gold at $1191 (+0.50 %), Silver at $15.95 (+1.15 %), Crude Oil at $51.78 (-1.70 %)
• Rates: US 10 year yield at 2.11, UK 10 year yield at 1.719, German 10 year yield at 0.496

News & Data:

• Japan Manufacturing PMI 52.0, Expected: 52.1, Previous: 52.1
• Euro Slides to Weakest Since 2006 on ECB, Greece as Dollar Gains (BBG)

Markets Update:

The Euro dropped sharply at the Sydney open amid poor liqudity, reaching a low of 1.1860, down almost 140 pips from last Friday’s close. The move led to broad USD strength and we saw similar moves in GBP/USD and USD/CHF. The gap in EUR/USD was quickly retraced though and the pair recovered to 1.1970 at the Tokyo open. Volatility in the EUR pairs is likely to stay elevated in the near-term with Greece again in the focus.

GBP/USD followed the Euro lower, with 1.5180 the Asian session low. Meanwhile, USD/JPY remained surprisingly calm. The pair didn’t benefit much from the USD strength at the open and has been consolidating between 120.30 and 120.60 for most of the session.

The commodity currencies have been under pressure since the Tokyo open, with the AUD/USD hitting a fresh low of 0.8035 and NZD/USD declining to 0.7617. Key support seen at the December low of 0.7607.

Upcoming Events:

• 09:30 GMT – UK Construction PMI (59.0)
• 09:30 GMT – Euro Zone Sentix Investor Confidence (-1.0)
• 13:00 GMT – German CPI (0.1 % m/m, 0.3 % y/y)
• 13:00 GMT – German HICP (0.2 % m/m, 0.2 % y/y)

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