A nervous New Year

4 January, 2016

As liquidity returns to markets at the start of the New Year, we’re seeing a fairly uncomfortable start, with trading halted in Chinese equities after a 7% fall in the Chinese composite index. The more risk averse tone has been reflected in other equity markets in Asia and is also being carried over into European trade and currencies. The latest China PMI manufacturing data (Caixin) fell to the disappointing side of expectations at 48.2, from 48.6 previously. We’ve also seen the USDCNY fixing above the 6.50 level, suggesting that the appetite for a weaker currency is likely to remain in the early part of 2016.

The yen has been the main beneficiary on developments so far, USDJPY bursting below 120 to levels last seen mid-October. But the impact has been felt elsewhere, with higher-yielding and commodity currencies under pressure, with the kiwi, Aussie and Canadian dollar all weaker vs. the US dollar. Also not helping has been the escalation of political tensions between Saudi Arabia and Iran after diplomatic relations cut in the wake of an attack on the Saudi embassy in Tehran. Not surprisingly, gold has benefited from this general tone of risk aversion, up nearly 1% during Asia trade.

Naturally, it’s going to be the US employment report on Friday that will shape the coming week, especially with the dollar likely to be increasingly sensitive to the tone of data releases as the market gauges when the Fed may make its next move. For today, we have some regional CPI data in Germany, together with manufacturing PMI data in the UK and ISM data in the US. Expect volatility to remain on the high side as markets settle into a more nervous start to the New Year.


Source link  
Markets recede from the recent highs

A strong Nonfarm Payrolls caused pressure on the stock markets, reducing the chances of the interest rates lowering by the Fed in the upcoming months...

Gold resumes rally, pushing past $1400

Gold prices resumed a push higher on Monday, as flows into the precious metal continued on improved prospects for easier monetary policy from...

Gold rises as markets slip

Market caution continues to support gold. Quotes of this metal rose to $1337, repeatedly trying to push above this year highs at the 1340-1360 area...


Trump says Brexit should happen

President Donald Trump promised the U.K. a "phenomenal trade deal" Tuesday, on the second day of his state visit to Britain...

Euro and Gold instead of Dollar

Gold rose on Monday to the highest levels since February, reaching $1327 per ounce. In the first hours of the Tuesday trading session, there...

Markets recover after the drop

The markets decline on investors' fears that trade conflicts will drag on and slow down demand, and this dynamic coincided with breaking through important...


Markets pressured by Huawei problem

Alphabet and some other American IT companies have suspended business with Huawei, which is one of the first examples of major consequences for...

The climate is changing rapidly

British people need to fly less, drive electric cars, eat little meat and turn their home thermostats down to 19 degrees Celsius (66 Fahrenheit) in order to rein...

Chinese stocks saw their worst week

Chinese stocks have taken investors on a ride this year. Shanghai and Shenzhen have been the best performing global markets this year, with the Shanghai...

  


Share it on:   or