Thursday 15th January: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 2.00 %, Shanghai Composite gained 1.35 %, Hang Seng rose 0.35 %, ASX declined 0.40 %
  • Commodities: Gold at $1230.60 (-0.30 %), Silver at $16.83 (-0.95 %), WTI Oil at $48.00 (-1.00 %), Brent Oil at $49.32 (-1.05 %)
  • Rates: US 10 year yield at 1.879, UK 10 year yield at 1.511, German 10 year yield at 0.428

News & Data:

  • Australia Employment Change 37.4k, Expected: 3.8k, Previous: 44.9k
  • Australia Full Employment Change 41.6k, Previous: 2.6k
  • Australia Unemployment Rate 6.1 %, Expected: 6.3 %, Previous: 6.2 %
  • Australia Participation Rate 64.8 %, Expected: 64.7 %, Previous: 64.7 %
  • Reserve Bank of India: Cuts repo rates by 25bp to 7.75%
  • Japan Core Machinery Orders (1.3 % m/m, -14.6 % y/y)
  • Bank of Japan Governor Kuroda: Watching risk and adjust policy if needed
  • Kuroda: Easing having intended effects on economy
  • Kuroda: Will continue to ease till 2% inflation target
  • Unscheduled India Rate Cut Sends Stocks Soaring (BBG)
  • Most Asian Stocks Advance as Japan Rebound Outweighs U.S. Sales (BBG)
  • Aussie Rises Toward One-Month High on Jobs Data as Yen Weakens (BBG)

Markets Update:

Better than expected Australian employment data boosted the Aussie Dollar. Employment increased by 37.400 in December after adding 4200 in October, taking the cumulative increase in employment to 99.000 in the three months to December. Employment in the month were mostly full-time jobs, with the gain of 41.600 taking the increase in the past three months to 75.700. Part-time employment declined 4100 this month has gained 23.300 in the past three months. The unemployment rate edged down to 6.1% from a revised 6.2% in November (originally reported as 6.3%). However, some banks note that it is too early to suggest that the upward trend in unemployment is over. They remind that the ABS numbers have been unreliable in the past half year so further data and re-analysis is needed to confirm the current strength.

AUD/USD rose to a high of 0.8218 in Asia, first driven by the employment numbers and then further supported by the bounce in commodities, especially Copper. The pivotal resistance level lies now at 0.8250 and a break above could trigger a further short squeeze and target a test of the December 10th high at 0.8370. AUD/NZD was in demand overnight, which kept the NZD/USD consolidating in a 35 pips range. The pair is likely to remain within the 0.76 and 0.7850 range in the near-term and fading the extremes still seems the appropriate strategy. Meanwhile, the Canadian Dollar failed to benefit from the bounce in Oil prices, with USD/CAD still at 1.1970. Key support at 1.1920/25, while 1.2010 the next s/t resistance level.

USD/JPY had an impressive bounce off the 116.20 level yesterday and extended gains in the Tokyo session. Dealers again note good demand from local names. Immediate resistance seen at 118.10 and then not much until 118.80.

Looking ahead, there will be no important data releases in the upcoming EU session, but the US session should get more interesting with the PPI, Jobless Claims and Philadelphia Manufacturing Index data.

Upcoming Events:

  • 10:00 GMT – Euro Zone Trade Balance (€21.3bln)
  • 13:30 GMT – US Core PPI (0.1 % m/m, 1.9 % y/y)
  • 13:30 GMT – US PPI (-0.4 % m/m, 1.0 % y/y)
  • 13:30 GMT – US Initial Jobless Claims (291k)
  • 15:00 GMT – US Phily Fed Manu Index (19.9)

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