Frank Walbaum
FX Strategies.Asia
Important news for the day
Chinese equities
Equities in Asia continued to rise for the day. The stimulus by the PBOC seemingly caused investor demand to be restored. The Central bank had reduced their loans for 1- year loans. Furthermore also other Asian markets like Hong Kong and Japan went to the upside, indicating the positive demand might be here to stay for now. Also prices for iron ore were rising as the economic demand seems positive.
Market talk
The Dollar had extended its losses causing the Dollar index to weaken below the technical support level. This might cause the Greenback to weaken further against other currencies. As also oil prices weaken slightly alongside the Silver market the economic outlook might paint a mixed picture. Stock markets currently reflect this, as most US and European indices remain in a cautious sideways pattern. The Asian market remains influenced by the Chinese stimulus as it seems. The CAD might gear up steam based on the monthly chart against the EUR. And the interest rate decision tomorrow from Switzerland could cause the USDCHF to rise, should the SNB decrease rates.
Tendencies in the markets
- Equities mixed, USD weaker, cryptos sideways, oil sideways, Silver correcting, Gold sideways, JPY weaker
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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