Global Markets:

  • Asian stock markets: Shanghai Composite up 0.60 %, Hang Seng down 0.25 %, ASX down 0.35 %, Nikkei closed for a holiday
  • Commodities: Gold at $1168 (-0.30 %), Silver at $15.91 (-1.20 %), Crude Oil at $80.18 (-0.50 %)
  • Rates: US 10 year yield at 2.335, UK 10 year yield at 2.251, German 10 year yield at 0.838

News & Data:

  • China HSBC Manufacturing PMI 50.4, Previous: 50.4
  • China Non-Manufacturing PMI 53.8, Previous: 54.0
  • Australia Building Approvals -11.0 %, Expected: -1.0 %, Previous: 3.4 %

CFTC Positioning Data:

  • EUR net short 166K vs net short 159K prior
  • JPY net short 67K vs 71K net short prior
  • GBP net short 6K vs net short 4K prior
  • AUD net short 34K vs net short 32K prior
  • CAD net short 21K vs net short 22K prior
  • CHF net short 20K vs net short 18K prior
  • NZD net short 4k vs net short 2k prior

Markets Overview:

Liquidity in Asia was poor as Tokyo was away for a holiday. EUR/USD dropped suddenly from 1.25 to 1.2440 around 00:45 GMT, with no apparent reason. A fair number of stops got triggered on the way down and the next support level is now seen at 1.2420. Similar price action in GBP/USD, which declined to 1.5930. Cable has been able to hold above 1.5880 (October low) so far, but a break lower seems imminent, paving the way for a 1.56 test.

USD/JPY was quiet for a change. A larger barrier option at 113.00 has capped the topside for now and interest was low for the rest of the session. The Aussie Dollar declined on bit weaker than expected Chinese data over the weekend, but 0.87 support held so far. AUD/USD has been in consolidation for several weeks now and bears will need a clear break sub-0.8650 for downside momentum to accelerate. Meanwhile, USD/CAD briefly traded above 1.13, but is now back at 1.1285 heading into the London open. Asia notes solid offers at 1.1325-30.

The Week Ahead:

Today, we will see a series of Manufacturing PMI numbers out of the Euro-Zone and the UK. The headline figure is expected at 51.8 for Germany and 51.2 for the UK. In the US session, we will get the ISM Manufacturing PMI number, which is expected at 56.2. Tuesday sees the RBA rate decision, UK Construction PMI and US & Canadian Trade Balance numbers. The RBA is expected to leave rates unchanged and maintain their neutral bias. On Wednesday, New Zealand will publish their employment data and we will see the HSBC Services PMI figure. This is followed by the Services PMI numbers out of the Euro Zone & UK and ADP Nonfarm Employment & ISM Non-Manufacturing PMI data in the US.

On Thursday, we’ll see the Australian employment figures, expected at 0k for the employment change and 6.1 % for the unemployment rate. In the European session, Germany will release their Factory Orders data, followed by UK Industrial & Manufacturing Production figures. Later in the day, the Bank of England and ECB will announce their interest rate decisions, followed by the Draghi press conference, US Initial Jobless Claims and the Canadian Ivey PMI.

Finally, on Friday, we’ll get German trade balance data, followed by the UK trade figures and then the main event of the week – NFP numbers, expected to arrive at 231k. The unemployment rate is forecast to remain steady at 5.9 %

Upcoming Events:

  • 08:45 GMT – Italian Manufacturing PMI (50.7)
  • 08:50 GMT – French Manufacturing PMI (47.3)
  • 08:55 GMT – German Manufacturing PMI (51.8)
  • 09:00 GMT – Euro Zone Manufacturing PMI (50.7)
  • 09:30 GMT – UK Manufacturing PMI (51.2)
  • 14:45 GMT – US Manufacturing PMI
  • 15:00 GMT – US ISM Manufacturing PMI (56.2)