Forex news from the European morning session 5 Jan

News:

  • BOJ's Kuroda says Japan needs wage gains for CPI to rise
  • Spain's Rajoy says he can lead a coalition government
  • Libyan Es Sider oil port hit by IS shelling
  • Barclays wields the axe in Asia - Rtrs
  • Ryan's back on Tip Tv
  • Option expiries 10 am NY cut 5 Jan

Data:

  • Eurozone Dec CPI estimate +0.2% vs +0.3% exp
  • UK Markit/CIPS construction PMI Dec 57.8 vs 56.0 exp
  • Italian Dec CPI flash yy +0.1% vs +0.2% exp
  • Germany unemployment change Dec -14k vs -8k exp
  • Spain unemployment change Dec -55.8k vs -50.0k exp
  • Germany ILO employment Nov SA +41k vs +32k prev
  • Japan vehicle sales Dec yy +3.1% vs +0.3% prev
  • Nikkei 225 closes down -0.42 % at 18,374.00

It's been another busy session but not so headless as yesterday

Asian equity markets were volatile but in tighter ranges with Chinese markets being supported by the authorities and European equities opened firmer

It wasn't long though before the sheen was lost and the ghosts of yesterday's collapse gave traders less reason to wait for further rallies. Markets turned lower but there was no joy for the euro with the funding ccy-led correlation being left to one side.

Early pressure on the euro was accelerated by EURJPY coming under renewed pressure as equities wobbled and safe-haven yen demand returned to see a test of 128.00 barrier option interest from 129.40 before eventually driving through on the second attempt as I type

EURUSD dipped into 1.0800 finding small relief on better German jobs data only to then get slapped again to test 1.0780 pre-empting the Eurozone flash CPI data.

That softer reading duly delivered we've since seen new 1-month lows of 1.0753 with stops reported below 1.0750 should we break

Cable had run into decent offers/res between 1.4725-30 and was on the back foot at 1.4693 when better UK construction PMI provided brief respite to 1.4702 only then to fall back to post 1.4659 before finding support helped by EURGBP sales through 0.7330

USDJPY had dropped to 118.80-85 support areas again from 119.56 on the yen demand but then found USD general support to post 119.15 before bowing to EURJPY selling pressure once again

USDCHF has enjoyed the greenback love to post 1.0102 from 1.0020 with EURCHF demand bucking the trend and suggesting some SNB support. USDCAD has enjoyed good demand from 1.3900 on softer oil prices but has failed above 1.3950 and since returned to look at 1.3920

AUDUSD has been on the back foot after failing to hold above 0.7200 and we've posted 0.7166 while NZDUSD has also felt the USD pressure to post 0.6694 with one eye on the GDT auction now underway.

Less frantic than yesterday but still lively and providing plenty of movement again