Forex news from the European morning session 8 Jan

News:

  • PBOC considering new tools to prevent too much yuan volatility
  • Brent crude oil futures tumble again on Chinese market fall-out
  • China removes need for gold import licence for industrial use
  • UK's Osborne says it would be inappropriate to put pressure on BOE for rate hike
  • Paris police shoot man armed with a knife
  • Cameron says he sees UK's future in a reformed EU
  • Former BOE's Bean says UK GDP data is flawed
  • SNB forex reserves end-Dec CHF 559.68bln vs 562.63bln end-Nov
  • PBOC forex reserves end-Dec USD 3.33 trln vs 3.44 trln end-Nov
  • Have the ECB done enough to raise inflation expectations?
  • EURUSD unchanged as the Eurozone takes two steps forward and one step back
  • Cable takes out 2015 lows to post 1.4561
  • Update: Option expiries 10 am NY cut today 7 Jan
  • Roll up for the first ForexLive non-farm payrolls competition of 2016

Data:

  • Germany factory orders Nov mm +1.5% vs +0.1% exp
  • November 2015 Eurozone unemployment rate 10.5% vs 10.7% exp
  • UK Halifax house price index Dec mm +1.7% vs +0.5% exp
  • December 2015 Eurozone Markit retail PMI 49.0 vs 48.5 prior
  • December 2015 Eurozone economic sentiment 106.8 vs 106.1 exp
  • Nikkei 225 closes on session lows at 17,767.34

A real test of traders nerve so far as the fallout from the close of Chinese equity markets after just 14 minutes continues to reverberate.

For detail of all the volatility across the board you only need to put up your 5 minute charts but overall we've seen equity markets tumble, oil markets tumble and currency pairs up and down like the proverbial.

The euro started the session on the back foot ignoring the equity falls as has been the norm of late and EURUSD fell back to test 1.0780 from 1.0830 with on-going falls in other euro pairs. But then we saw strong demand return and EURSD fly through 1.0850 to post 1.0875 so far which in turn dragged EURGBP through 0.7400 again after earlier failure and now posted 0.7470 in rapid time.

That has helped cable post 5 1/2 year lows of 1.4535 as I type after wiping its feet at 1.4580 then 1.4565 initially. GBPJPY selling has been notable as has been JPY-pair selling in general as safe-haven demand for the yen continues. USDJPY took out the 117.50 barrier option defence to post 117.33 as EURJPY also broke down through barrier option support at 127.00 to post 126.80 in a hurry. Both have found support down there though and now 117.63 and 127.68 again as the EUR demand remains relentless.

USDCHF has found itself on the back foot into 1.0000 again as EURUSD rallies and EURCHF once again remains underpinned but with CHF safe-haven demand tempering further gains.

Usual scenarios in other pairs but all getting caught up in the cross play turmoil which has seen USDCAD rise to 1.4170 on falling oil prices with Brent and WTI both posting 12 year lows. AUDUSD has been on the back foot mostly apart from one early brave attempt to hold its own but AUDJPY selling and EURAUD buying have both combined to force a breach of 0.7000.

Wild and woolly still and not for the faint-hearted or inexperienced trader but opportunities galore nonetheless.