News & Data:
CFTC Positioning Data:
Asian equity markets are mostly lower after disappointing econ data out of China. The official Manufacturing PMI arrived much weaker than expected and the HSBC PMI also missed expectations. Oil prices declined again overnight, while precious metals remained stable.
In FX, EUR/USD had a quiet session. The pair opened higher at the Sydney open, at 1.1310, driven by EUR/CHF buying. It traded up to a high of 1.1325 and then settled back around 1.1310 for most of the session. EUR/CHF turnover was larger than usual, after a Swiss newspaper wrote that the SNB operates an unofficial corridor of 1.05-1.10 to prevent excessive CHF strength. Again, there is no confirmation of this yet, but it would certainly explain the price action in the pair last week. The market reacted by selling CHF at the open and EUR/CHF had a 100 pips gap to the upside. It fell back to 1.04, only to return back to 1.0475 later. Liquidity in the CHF pairs has yet to normalize, so volatility will remain high.
USD/JPY opened sharped lower and large stops were triggered below 117.20. However, the pair quickly recovered and dealers report that large buying from corporate names pushed the pair to a high of 117.85. Meanwhile, AUD traders are eagerly waiting for the RBA rate decision tomorrow. Bank analysts are split on this, with some expecting to see a 25 bps cut tomorrow, while other don't expect to see one until early Summer. The market is clearly expecting either a rate cut or a shift in the statement that would signal rate cuts in the near future. USD/CAD is back above 1.27. Immediate resistance seen at 1.28, but no significant hurdle seen until 1.30.
Looking ahead, we have a series of Manufacturing PMI data out of the Euro Zone countries, the UK and the US. For a preview of this week's key data releases and events, see the calendar below.
We wish you a very successful trading week ahead!
The Week Ahead (Key Events):
Tuesday, February 03rd
Wednesday, February 04th
Thursday, February 05th
Friday, February 06th