Friday 19th January: European Open Briefing

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Friday 19th January: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei up 0.22%, Shanghai Composite up 0.19 %, Hang Seng lost 0.07 %, ASX down 0.15%
  • Commodities: Gold at $1332.30 (+0.38 %), Silver at $17.05 (+0.57 %), WTI Oil at $63.14 (-1.27 %), Brent Oil at $68.64 (-0.97 %)
  • Rates: US 10-year yield at 2.631, UK 10-year yield at 1.331, German 10-year yield at 0.574

News & Data:

  • (NZD) Business NZ Manufacturing Index 51.2 vs 57.7 previous
  • (USD) Crude Oil Inventories -6.9M vs -1.4M expected
  • (USD) Natural Gas Storage –183B vs -201B expected
  • (CAD) ADP Non-Farm Employment Change -7.1K vs 59.2K previous
  • (USD) Unemployment Claims 220K vs 250K expected
  • (USD) Philly Fed Manufacturing Index 22.2 vs 24.9 expected
  • (USD) Housing Starts 1.19M vs 1.28M expected
  • (USD) Building Permits 1.30M vs 1.29M expected
  • House approves bill to keep government open as Senate Democrats take heat for threatening to block it
  • SEC says bitcoin funds raise 'investor protection issues'

Markets Update:

Asian equities higher in quiet Friday trade. Headline focus remains on the delicate negotiations in Washington to avoid a government shutdown. While shutdown odds appeared to recede after House passed a stopgap measure, Senate prospects remain dicey. Lawmakers adjourned debate until Friday, leaving less than 24 hours to overcome divisions and pass it before the midnight deadline.

Regional yields have spiked higher, with Aussie and NZ 10 notes underperforming (rates up 6-7n). JGY 10Y yield up ~1bp to 0.08% – however US Treasuries have remained flat. While backup has been flagged as the biggest potential headwind for stocks, it has been contained as inflation remains subdued and no signs of any meaningful acceleration in central bank policy shifts. BoJ made no change to its JGB purchases on Friday.

Chinese equities slightly higher. Following the above consensus Q4 GDP growth, focus turns to this year’s growth to see if cumulative effects of regulations and reforms have a bigger impact.

The Aussie Dollar had continued its bull run for the sixth straight week, and the AAUD/USD has broken the psychological resistance level of 0.800 decisively. Euro has also risen, contrary to expectations that it will test the 1.215 levels. However, with the Dollar set to gain in the coming weeks, further upside is not expected from the Euro. The Dollar Index touched a high of 91 yesterday, but has since fallen. The strengthening dollar could push USD/JPY to 112 as well.

Upcoming Events:

  • 07:00 AM GMT – (EUR) German PPI m/m
  • 08:15 AM GMT – (CHF) PPI m/m
  • 09:00 AM GMT – (EUR) Current Account
  • 09:30 AM GMT – (GBP) Retail Sales m/m
  • 01:30 PM GMT – (CAD) Foreign Securities Purchases
  • 01:30 PM GMT – (CAD) Manufacturing Sales m/m
  • 03:00 PM GMT – (USD) Prelim UoM Consumer Sentiment
  • 03:00 PM GMT – (USD) Prelim UoM Inflation Expectations
  • 05:15 PM GMT – (USD) FOMC Member Quarles Speaks
  • &more…

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