Forex news from the European morning session 6 Jan

News:

  • South Korea says it has not detected radiation from N.Korea nuclear test
  • ECB's Praet says inflation will return if they print enough money
  • ECB's Praet sees current policy in place until at least March 2017 or longer if needed
  • Japan's Abe says he will raise sales tax next year unless a "serious situation" prevails
  • China's equity markets rally after extension on share-sale ban
  • Chinese offshore yuan tumbles further to record lows of 6.7250
  • Are demand management policies the solution or a mass delusion ?
  • Sell EURUSD, but not just yet say BOA Merrill
  • FOMC Minutes will show hawkish tones on lift-off timings but caution advised
  • USDJPY is being a such a good boy by playing nicely with the levels
  • USDCAD continues to rally as oil price tumbles
  • Option expiries 10 am NY cut 6 Jan

Data:

  • December 2015 UK Markit/CIPS services PMI 55.5 vs 55.6 exp
  • November 2015 Eurozone PPI -0.2% vs -0.2% exp m/m
  • Eurozone Markit services Dec PMI final 54.2 vs 53.9 exp
  • Germany Markit services Dec PMI final 56.0 vs 55.4 exp
  • France Markit services Dec PMI final 49.8 vs 50.00 exp
  • Italy Markit services Dec PMI 55.3.0 vs 53.6 exp
  • Spain Markit services PMI Dec 55.1 vs 56.6 exp
  • French Dec consumer confidence 96 vs 95 exp
  • Nikkei 225 closes down -0.99% at 18,191.32

It's been a more orderly market in terms of forex action but with good opportunities being created by Chinese economic concerns and the not so small matter of N Korea reportedly having carried out an H-bomb test . S Korea says the amount of hydrogen used was minimal but nonetheless it's not helping the 2016 wobbles.

Safe-haven demand for the yen has been the main play and we've seen that impact on core pairs across the board. USDJPY failed on an attempt back above 118.80 and has been sold again to 118.26 with EURJPY continuing its slide to 127.02 before running into barrier option defence. AUDJPY ,NZDJPY, CADJPY selling have all had their own impact sending core pairs down to 0.7058, 0.6626 and up to 1.4103 respectively. The latter pair getting more than a helping hand up from 1.4020 on tumbling oil prices.

Brent crude has tumbled through 12 year lows to post $34.83 a fall of almost 4% from Asian highs with WTI having its own trip down below $35.00 to post $34.80, a fall of 2.8%. Gold has had another decent session rising to post $1088.21, a gain of $10.

CHFJPY selling has pushed USDCHF back up to 1.0113 from 1.0085 only to return from whence it came as EURCHF sellers continue to put in a cap above 1.0850.

The EURJPY slide has given EURUSD little excuse to fall again to post 1.0720 despite better PMI data and similarly cable has been down to 1.4620 from 1.4665 despite better UK services only to bounce back then retreat once more . EURGBP had a look at 0.7320 bids/support having held below 0.7335 in early trading but it too has staged a small reversal.

Lots going on still and there's definitely pips to be made but caution is advised with US ADP jobs and PMI data still to come. Not to mention the FOMC Minutes at 19.00 GMT