Article Highlights

  • U.K. BRC shop price index (y/y) down by 1.4% vs. 1.7% decline in November
  • Japan’s final manufacturing PMI revised higher from 51.9 to 52.4 in December
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Forex price action was a mixed bag of nuts, as Japanese and New Zealand traders traded headlines from the past couple of days.

Major Events:

Japan’s final manufacturing PMI – With not a lot of data on the docket, Asian session traders took time to digest the upside revision in Japan’s manufacturing data.

The final reading for the manufacturing PMI came in at 52.4, much higher than the initial index reading of 51.9 and November’s 51.3 figure. Production and new orders saw strong growth, while cost inflationary pressures shot up to a 17-month high. In addition, operating conditions across the industry improved at the fastest rate since December 2015.

Overall the numbers suggest that Japan’s manufacturing sector expanded for a fourth consecutive month in December, a good sign especially amidst inconsistent international demand.

Mixed risk sentiment – Traders from Japan and New Zealand are back from their holidays and they sure didn’t waste time pricing in themes from the past couple of days!

Nikkei celebrated the yen’s further losses and Japan’s better-than-expected manufacturing PMI, while the New Zealand dollar took some hits on the back of a weak dairy auction. Nikkei is up by a nice 2.56% while Australia’s A SX 200 is also up by 0.06%.

Chinese markets weren’t as optimistic though. The PBoC weakened the yuan for another day, which fuelled speculations that China will see more capital outflow. See, analysts believe that threats of more stringent capital outflow measures only motivate yuan-holding investors to exchange their yuans at a quicker pace.

This is probably why Hang Seng is down by 0.18% today while the Shanghai index trimmed its gains to 0.70%.

Major Market Movers:

JPY – Better-than-expected data from Uncle Sam pushed USD/JPY above 118.00, which caused upward pressure on the rest of the yen crosses.

USD/JPY is up by 26 pips (+0.22%) to 117.93, GBP/JPY popped up by 39 pips (+0.27%) to 114.38, EUR/JPY shot up by 21 pips (+0.17%), and AUD/JPY is up by 42 pips (+0.49%) to 85.40.

NZD – The New Zealand dollar took hits after a weak dairy auction during the U.S. but soon found bottoms against its major counterparts during the Asian session.

NZD/USD hit a low of .6890 before capping the session at .6906 while NZD/JPY bounced from 81.21 to trade at 81.6. Ditto for AUD/NZD, which stopped at 1.0488 before closing the session at 1.0484, and NZD/CAD, which bounce from .9261 to trade at .9292.

Watch Out For:

  • 9:00 am GMT: Spanish unemployment change (-44.2K expected, 24.8K previous)
  • 9:15 am GMT: Spanish services PMI (54.8 expected, 55.1 previous)
  • 9:45 am GMT: Italian services PMI (52.7 expected, 53.3 previous)
  • 9:50 am GMT: French final services PMI expected to remain at 52.6
  • 9:55 am GMT: German final services PMI expected to remain at 53.8
  • 10:00 am GMT: Euro Zone final services PMI expected to remain at 53.1
  • 10:30 am GMT: U.K. construction PMI (52.6 expected, 52.8 previous)
  • 10:30 am GMT: U.K. net individual lending expected to remain at 4.9B GBP
  • 10:30 am GMT: U.K. mortgage approvals (69K expected, 68K previous)
  • 11:00 am GMT: Euro Zone CPI flash estimate (y/y) (1.0% expected, 0.6% previous)
  • 11:00 am GMT: Euro Zone core CPI flash estimate (y/y) expected to remain at 0.8%
  • 11:00 am GMT: Italian preliminary CPI (0.3% expected, -0.1% previous)

See also:

U.S. Session Recap
London Session Recap

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