Article Highlights

  • Japanese banks closed for the holiday
  • China’s Caixin manufacturing PMI up from 50.9 to 51.9 in December
  • Australia’s commodity prices (y/y) rose by 45.5% vs. 28.7% increase in November
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Risk appetite was the name of the game during the Asian session, as China printed better-than-expected factory numbers and Asian session traders tracked their European counterparts.

Major Events:

China’s Caixin manufacturing PMI – A private but closely-watched manufacturing survey in China clocked in a reading of 51.9 in December. This not only beat the expected 50.9 figure, but also marks the fastest pace of expansion since January 2013.

Remember that a reading of 50.0 and above indicates industry expansion. The official figures tend to focus on larger companies, while Caixin’s data focuses on smaller and medium-sized firms.

Even the details provided a bit of boost to risk appetite. See, the output and new orders components of the report both registered multi-year highs, while costs for input and output charges also rose quickly. Overall, the numbers suggest that growth in the mainland is stabilizing and that there’s reason to expect more inflation pressure.

Overall risk appetite – Asian session traders cheered China’s better-than-expected factory data especially since the official manufacturing and non-manufacturing reports slightly missed their estimates earlier this week.

With Japanese markets still out on holiday, traders had time to track the European equities markets. Recall that European indices hit new highs on the back of strong PMIs from the euro zone.

Australia’s A SX 200 is up by 1.19%, Hang Seng is up by 0.67%, and the Shanghai index is up by 0.85%.

Major Market Movers:

USD – The low-yielding Greenback took hits across the board thanks to overall risk appetite increasing the demand for higher-yielding bets.

EUR/USD inched 24 pips (+0.23%) higher to 1.0485, USD/JPY slipped by 20 pips (-0.17%) to 117.39, and GBP/USD popped up by 17 pips (+0.14%) to 1.2304.

Comdolls – The possibility of more demand from China pushed commodity-related currencies higher against the dollar.

AUD/USD gained 45 pips (+0.63%) to .7229, USD/CAD slipped by 25 pips (-0.19%) to 1.3411, and NZD/USD jumped by 29 pips (+0.42%) to .6961.

Watch Out For:

  • Germany’s preliminary CPI (0.1% previous)
  • 8:45 am GMT: French preliminary CPI (0.5% expected, 0.0% previous)
  • 9:30 am GMT: Switzerland’s manufacturing PMI (56.1 expected, 56.6 previous)
  • 9:55 am GMT: German unemployment change (-5K expected and previous)
  • 10:30 am GMT: U.K. manufacturing PMI (53.3 expected, 53.4 previous)

See also:

U.S. Session Recap

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