Tuesday 13th January: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei down 0.80 %, Shanghai Composite gained 0.50 %, Hang Seng rallied 0.70 %, ASX dropped 0.30 %
• Commodities: Gold at $1235.80 (+0.25 %), Silver at $16.78 (+1.40 %), WTI Oil at 45.30 (-1.60 %), Brent Oil at $47.80 (-1.40 %)
• Rates: US 10 year yield at 1.904, UK 10 year yield at 1.574, German 10 year yield at 0.48

News & Data:

• China Trade Balance CNY49.6bln, Expected: CNY49.85bln, Previous: 54.47bln
• China Imports -2.4 %, Expected: -7.4 %, Previous: -6.7 %
• China Exports 9.7 %, Expected: 6.8 %, Previous: 4.7 %
• Japan Current Account ¥0.43trln, Expected: ¥0.13trln, Previous: ¥0.83trln
• Japan Adjusted Current Account ¥0.91trln, Expected: ¥0.69trln, Previous: ¥0.95trln
• Japan’s Economy Minister, Akira Amari: Oil decline can be negative for meeting BOJ price goal
• Japan’s 5yr Government Bond Yields drop below zero for the first time
• Asian Stocks Decline as Oil Slumps, Yen Drags Japan Shares Lower (BBG)
• Oil Extends Drop to Near $45 as U.S. Supply Seen Worsening Glut (BBG)

Markets Update:

The Nikkei was weighed down by a stronger Yen in the Asian session, while other major APAC stock indices are up on the day. In commodities, Gold and Silver gained again, while Oil prices are declining to fresh multi-year lows. In overnight news, the Chinese trade data showed that exports gained 9.7 %, but imports declined 2.4 %. The Japanese trade balance was slightly better than expected, at ¥0.43trln vs a forecast of ¥0.13trln.

EUR/USD rose to 1.1855 at the Tokyo open, but ran into decent offers there, which led to a pullback to 1.1820. Further consolidation between 1.17 and 1.1950 seems the likely scenario ahead of the ECB meeting on January 22nd. GBP/USD is still struggling with the 1.52 resistance level and if it doesn’t take it out soon, we could see the low of 1.5050 retested soon. At 09:30, we will get the UK inflation data for December, and with little UK data other than that, it could set the tone for this week.

The whipsaw price action in USD/JPY continues. After selling from hedge funds drove the USD/JPY below 118.00 in the early session, the pair rallied and reached a high of 118.80. Good offers reported ahead of yesterday’s high at 119.30. Key intraday support now seen at 117.75. The commodity currencies were under pressure overnight. AUD/USD bounced off the 0.8125 level and rallied to 0.82, but failed to sustain momentum up there and fell back to 0.8150. Similar price action in NZD/USD, after it was rejected of the key resistance area at 0.7850-60 yesterday. Meanwhile, the Canadian Dollar continues to weaken amid declining Oil prices. USD/CAD is about to hit 1.20 and next key chart resistance is then seen at 1.22.

Upcoming Events:

• 07:00 GMT – German WPI (0.2 % m/m)
• 09:30 GMT – UK CPI (0.1 % m/m, 0.7 % y/y)
• 15:00 GMT – US JOLTs Job Openings (4.86mln)
• 22:00 GMT – FOMC Member Kocherlakota speaks

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