Equity markets stabilize as China intervenes. Gold hits a 1-month high, Euro breaks below 1.08
- Japan monetary base y/y 29.5% vs. 33.2%
- Spain unemployment change m/m -55.8k vs. -50.0k
- Germany unemployment change -14k vs. -8k; Unemployment rate 6.3% vs. 6.3%
- UK Construction PMI 57.8 vs. 56.0
- Eurozone CPI estimate y/y 0.20% vs. 0.30%
- Eurozone Core CPI estimate y/y 0.90% vs. 1.0%
- Canada IPPI m/m -0.2% vs. 0.0%
- Canada RMPI m/m -4.0% vs. -2.5%
Coming up
- New Zealand GDT Price Index
The day after the global equities plunged the markets were largely stable this morning. The move came about as news hit the wires that China’s state-controlled funds were intervening in the equity markets and buying stocks in a bid to stabilize the market rout. The Shanghai Composite was largely stable but declined a modest -0.26% for the day. The Nikkei 225 was down -0.42% in Asian trading. On the currency front, the markets were quiet in the Asian session with the lack of any major news to go by. The commodity risk currencies continued to remain under pressure as institutional flows started to buy up the US Dollar. AUDUSD was down -0.28%, trading at 0.717 after a brief session high to 0.721 in early trading before the Aussie gave up its gains. The Kiwi was weaker, down -0.54% as the NZDUSD touched a session low to 0.669 before recovering modestly higher off the 9-day lows.
The Japanese Yen remained firm as USDJPY lost -0.38% into the NY session. USDJPY touched the lows of 118.815 before attempting to pull high and remains range bound within yesterday’s high and low. BoJ Governor Kuroda, in an interview to local television, remained upbeat on the BoJ’s inflation target, however, noting that the timing to reach the 2.0% inflation target could change due to falling Oil prices. He said that wages need to rise as well as prices as the Japanese economy is expected to recover in 2016. However, Kuroda noted that the BoJ would not hesitate to act if the need arises, including additional easing.
[Tweet “The European trading session focuses on the UK’s construction PMI numbers, rising to 57.8”]
The European trading session saw the focus shift to the UK’s construction PMI numbers which managed to rise to 57.8, above estimates of 56.0 and up from 55.3 previously. The better than expected construction data, however, did not help the Cable much. GBPUSD was down -0.28% and was seen trading near yesterday’s low at 1.465.
From the Eurozone, the flash CPI estimates were weak as the headline CPI annualized rose less than expected by 0.20%, below estimates of 0.40%, while the core CPI annualized was up 0.90%, below estimates of 1.0% increase. The weak inflation numbers saw the Euro turn weaker in today’s session with the bearish momentum picking up steam. EURUSD was down -00.82%, trading near 1.074 in a continued steady downtrend since the opening session. The USDCHF, on the other hand, was stronger, rising 0.72% with the Greenback trading at 1.00.
The NY session is relatively quiet with Canada’s RMPI declining -4.0% against estimates of -2.5% while the IPPI was down -0.20%. USDCAD which touched an intraday high to 1.394 remained unmoved on the news and is down -0.16% for the day at the time of writing.
On the commodity front, WTI Crude Oil continued to remain choppy but down -0.24% for the day as the ‘Black Gold‘ touched a session low to $36.45 before managing to pull back higher. Gold prices which touched a new high at 1083 yesterday were also stronger, up 0.57% for the day but remains well short of yesterday’s high, currently trading at $1080 to an ounce. The remainder of the evening is expected to remain quiet with New Zealand Global Dairy Trade index being the only main economic release for the rest of today.
#OPEC in its recent report predicts the growth of #Oil price up to $70. Do you believe that could happen this year?
— Orbex (@OrbexFX) January 5, 2016
