Forex news from the European morning session 4 Jan

News:

  • China's CSI300 falls 5% and triggers circuit breaker
  • Bahrain orders Iranian diplomats to leave within 48 hours
  • 2016 Oil forecasts lowered but still way above current prices
  • New Year resolution Number 1 - Make a list
  • Option expiries 10 am NY cut 4 Jan

Data:

  • December 2015 UK Markit CIPS manufacturing PMI 51.9 vs 52.7 exp
  • UK mortgage approvals Nov 70.4k vs 69.8k exp
  • Eurozone Markit mftg PMI Dec 53.2 vs 53.1exp
  • Germany Markit/BME PMI Dec 53.2 vs 53.0 exp
  • France Markit mftg PMI Dec 51.4 vs 51.6 exp
  • Italy Markit mftg PMI Dec 55.6 vs 54.9 exp
  • Spain Markit mftg PMI Dec 53.4 vs 53.5 prev
  • Switzerland Dec mftg PMI 52.1 vs 50.1 exp
  • Baden-Wuerttemberg CPI Dec mm -0.1% vs 0.0% prev
  • North Rhine Westphalia CPI Dec mm -0.1% vs +0.1% prev
  • Hesse CPI Dec mm -0.1% vs 0.0% prev
  • Saxony CPI Dec mm 0.0% vs +0.1% prev
  • Australia commodity index Dec yy -23.3% vs -22.0% prev
  • Nikkei 225 closes down -3.06 % at 18,450.98

The fun and games that began in Asia on the weaker Chinese data/equity slump along with the Saudi/Iran situation has continued into the European session

It's been lively and some with plenty of data thrown into the mix but largely ignored as markets focus on equities and safe-haven plays

USDJPY started on the back foot having fallen through 119.50 on weaker Nikkei and this decline continued as European markets and Nikkei futures fell further. Low post of 118.70 before bouncing back above 119.00 only to retreat once more

EURUSD had one early look above 1.0900 as the DAX opened 2.8% lower but fell back only to find demand into 1.0880 and then rebounding strongly to post 1.0946 only wiping its feet into 1..0930

But even help from softer equity markets hasn't enabled the pair to retreat back into 1.0900 before finding fresh demand. Softer regional CPI data from Germany has been tempered by better mftg PMI.

GBPUSD had made steady progress from Asian lows of 1.4693 but ran into res/offers around 1.4785 before then advancing to 1.4817 only to fall back to 1.4778 as I type. Softer UK mftg PMI and increased consumer credit figures were negated by EURGBP flows as that pair retreated to 0.7370 from early equity-led gains to 0.7425

EURCHF retreated from 1.0900 in Asia but found demand below 1.0850 and that helped USDCHF recover some poise after its own decline to 0.9925 but has failed to breach 1.000 after posting highs in Asia of 1.0028

USDCAD found itself falling early on from 1.3935 to 1.3886 but has recovered to post 1.3921. Oil prices have dipped and risen only to fall again adding to the latest USDCAD rally

AUDUSD felt the full force of the Chinese-led wobbles and has fallen from 0.7300 in Asia (0.7230 in Europe) to test support around 0.7200 while NZDUSD has also found itself on the back foot

US data to come but these markets are a little headless right now as we often see at the start of a new year with previous end of year flows being reversed but now with the added equity and geo-political uncertainty.