Wednesday 7th January: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.30 %, Shanghai Composite lost 0.30 %, Hang Seng gained 0.10 %, ASX dropped 0.20 %
  • Commodities: Gold at $1214.70 (-0.40 %), Silver at $16.45 (-1.05 %), WTI Oil at $47.78 (-0.30 %), Brent Oil at $50.92 (-0.50 %)
  • Rates: US 10 year yield at 1.959, UK 10 year yield at 1.581, German 10 year yield at 0.447

News & Data:

  • China Westpac-MNI Consumer Sentiment 112.5, Previous: 110.0
  • Oil Trades Near $48 as U.S. Stocks Seen Adding to Global Glut (BBG)
  • Yen Declines From Three-Week High as Dollar Strengthens Before Fed Minutes (BBG)
  • Treasury Bonds Defying Fed Rate Outlook With Biggest Rally Since 1970s (BBG)

Markets Update:

Markets remain nervous with commodities extending losses and US & European yields dropping to fresh lows. Asian equities are mostly in the red, while precious metals benefited from the risk aversion. Gold is trading near the $1215 resistance level, while Silver briefly traded above $16.50 in yesterday’s late NY session.

In FX, the USD regained strength with EUR/USD & GBP/USD posting fresh lows and USD/JPY recovering to 119.10. The Dollar move looks a bit overextended in the short-term, but with worries about Greece weighing on the Euro and the Pound Sterling weak amid political risks, it is difficult to go against the trend.

Commodity currencies weakened in the past 24 hours, with the exemption of the New Zealand Dollar, which received a further boost after the 3.6% price rise at the Global Dairy Trade auction yesterday. Trading the current range seems the appropriate strategy for the Kiwi/USD, with 0.7850/60 and 0.7600/10 the key tech areas.

The main event today will be the FOMC minutes. Traders are not expecting any surprises from the release, but will be looking at the debate around the decision to alter the forward guidance language in it’s last meeting, as well as comments about global economic conditions and the declining oil prices.

Upcoming Events:

  • 07:00 GMT – German Retail Sales (0.1 % m/m, 0.6 % y/y)
  • 08:55 GMT – German Unemployment Rate (6.6 %)
  • 08:55 GMT – German Unemployment Change (-6k)
  • 10:00 GMT – Euro Zone CPI (-0.1 % y/y)
  • 10:00 GMT – Euro Zone Core CPI (0.7 % y/y)
  • 13:15 GMT – US ADP Employment Change (226k)
  • 13:30 GMT – US Trade Balance (-$42bln)
  • 13:30 GMT – Canadian Trade Balance (-C$0.20bln)
  • 15:00 GMT – Canadian Ivey PMI (52.3)
  • 19:00 GMT – FOMC Meeting Minutes

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