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Risk-taking was the name of the game during the Asian session, as a positive Chinese report pushed higher-yielding currencies higher.

Meanwhile, the dollar lost pips against its counterparts after being boosted by a hawkish FOMC meeting minutes printed in the previous session.

  • Australia’s AIG services index pops up from 51.7 to 52.0 in December
  • Japan’s final manufacturing PMI dips from 54.2 to 54.0 in December
  • China’s Caixin services PMI rises from 51.9 to 53.9 in December vs. 51.8 expected
  • JP Morgan upgrades China’s 2018 growth forecast from 6.5% to 6.7%
  • Kuroda: BOJ to “patiently” maintain ultra-easy monetary policy

Major Events/Reports:

China’s Caixin services PMI

A private survey from the world’s second largest economy showed that service-oriented businesses had expanded 2 points to 53.9 in December. This is better than the expected 51.8 reading and marks the highest level since August 2014.

Apparently, greater volumes of new businesses boosted new orders to its fastest rate since May 2005 and enabled companies to add to their payroll numbers for another month.

Meanwhile, the composite output index also showed improvement, clocking a 1.4-point gain to 53.0. Both manufacturing and service sectors saw growth and point to improving economic sentiment.

BOJ to keep calm and carry on?

In a speech in Tokyo earlier today, Bank of Japan (BOJ) Governor Haruhiko Kuroda signalled that the central bank is in no hurry to tighten its monetary policies despite improving data from Japan.

Kuroda confirmed that they’re expecting the economy to continue showing steady growth. However, he also cautioned that “Unlike snow, Japan’s deflationary mindset won’t melt easily,” and that BOJ must continue its QQE program.

Does this completely kill one of our wacky predictions for 2018? I don’t think so!

Overall risk-taking

Optimism over a hawkish Fed, China’s positive PMI report, a slight recovery of global bond yields, and the return of our Japanese friends in the forex game all contributed to an overall risk-friendly environment.

The first trading day of 2018 boosted Nikkei to its highest levels since 1992 before settling with a 2.56% gain to 23,347.4. Hang Seng is also up by 0.45% to 30,699.7 while the Shanghai index gained 0.41% to 3,392.90. Australia’s A SX 200 is down by 0.42%, however.

Meanwhile, gold and oil prices saw slight dips. The former took hits on the back of dollar strength, while oil prices stepped back a bit after seeing fresh two and a half year highs.

  • Gold is down by 0.42% to $1,307.36;
  • Brent crude oil is down by 0.01% to $67.95, and
  • U.S. WTI is down by 0.03% to $61,90.

Major Market Mover(s):

AUD and NZD

Much like yesterday, the Antipodeans gained ground on the back of better-than-expected Chinese data.

AUD/USD recovered to .7833 after dipping to a low of .7814;
AUD/JPY shot up to 88.24 after slipping to 88.08;
NZD/USD fell to .7073 before recovering to .7099, and
NZD/JPY popped up to 79.98 after slipping to 79.75.

Watch Out For:

  • 7:00 am GMT: U.K.’s Nationwide house price index (0.1% expected and previous)
  • 8:15 am GMT: Spain’s services PMI (54.7 expected, 54.4 previous)
  • 8:45 am GMT: Italy’s services PMI to remain at 54.7?
  • 8:50 am GMT: France’s final services PMI expected to retain 59.4 reading
  • 8:55 am GMT: Germany’s final services PMI to remain at 55.8?
  • 9:00 am GMT: Euro Zone’s final services PMI to remain unchanged at 56.5?
  • 9:30 am GMT: U.K.’s services PMI (54.1 expected, 53.8 previous)
  • 9:30 am GMT: U.K. net individual lending (4.9B EUR expected, 4.8B EUR previous)
  • 9:30 am GMT: U.K. mortgage approvals (64K expected, 65K previous)