IronFX Daily Commentary by Sakis Paraskevov | 05/01/2016
January 5, 2016 9:45 am
Main points for Today:
• PBoC boost liquidity to calm the markets • China’s central bank injected 130bln yuan (around USD20bln) into the country’s financial system in an effort to calm investors after Monday’s sell-off. • By pumping the funds into the market, the Bank aims to signal that it is still on an easing bias and it stands ready to continue intervening to support the markets when needed. The Shanghai Composite Index dropped 7% on Monday, triggering an automatic halt to trading that sent a wave of fear in the global markets. • In early trading Tuesday, Asian stocks were mostly flat, with the Shanghai benchmark index up around 0.3% as we write. As the markets calm down, we could see safe-haven assets JPY, CHF and Gold losing some of their Monday’s glamour. However, increasing tensions between Saudi Arabia and Iran offer sufficient reasons to maintain some exposure on the funding currencies, including EUR. • Today: • Eurozone: Eurozone’s preliminary CPI for December is forecast to have accelerated. However, German inflation for the same month unexpectedly slowed, which raised concerns that the Eurozone CPI may slow down as well. EUR could weaken. • Germany: Unemployment rate for December. • Norway: Manufacturing PMI for December • UK: Construction PMI for December. Despite expectations of a rise, the unexpected decline in the manufacturing PMI on Monday increases the possibilities for another weak reading in the construction data. If so, this could be GBP-negative.
Main points for Today:
• PBoC boost liquidity to calm the markets
• China’s central bank injected 130bln yuan (around USD20bln) into the country’s financial system in an effort to calm investors after Monday’s sell-off.
• By pumping the funds into the market, the Bank aims to signal that it is still on an easing bias and it stands ready to continue intervening to support the markets when needed. The Shanghai Composite Index dropped 7% on Monday, triggering an automatic halt to trading that sent a wave of fear in the global markets.
• In early trading Tuesday, Asian stocks were mostly flat, with the Shanghai benchmark index up around 0.3% as we write. As the markets calm down, we could see safe-haven assets JPY, CHF and Gold losing some of their Monday’s glamour. However, increasing tensions between Saudi Arabia and Iran offer sufficient reasons to maintain some exposure on the funding currencies, including EUR.
• Today:
• Eurozone: Eurozone’s preliminary CPI for December is forecast to have accelerated. However, German inflation for the same month unexpectedly slowed, which raised concerns that the Eurozone CPI may slow down as well. EUR could weaken.
• Germany: Unemployment rate for December.
• Norway: Manufacturing PMI for December
• UK: Construction PMI for December. Despite expectations of a rise, the unexpected decline in the manufacturing PMI on Monday increases the possibilities for another weak reading in the construction data. If so, this could be GBP-negative.
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