Financial market research and analysis

Asian traders had good reasons to stay tense overnight. The services sector in China grew at a slower pace in December according to Caixin’s PMI data and North Korea conducted a nuclear test. USDCNY neared a five-year high as the PBoC fixed USDCNY at 6.5314 up from yesterday’s 6.5157. The spread between the onshore and offshore yuan widened to more than 1,300. It has been announced that the selling ban on Chinese securities will remain until new rules are revealed.

Nikkei and Topix sold-off 0.99% and 1.05% respectively, South Korea’s Kospi remained flat-to-negative while Shanghai’s stocks shored up 2.25% as buyers start creeping in to benefit from the selling ban. The Chinese stocks may be gaining for wrong reasons. Commodity prices are on slippery ground; copper is down 0.55%, iron ore shred 1.48%.

European stocks opened in the red. The FTSE lost more than 1% and extended losses to a fresh week low.
UK miners are the frontrunners to the bottom.
BHP (-4.29%), Rio Tinto (-4.05%), Anglo American (-3.23%) and Glencore (-3.05) rank comfortably among the worst performers in London.

The UK services sector performed poorly despite the festive month of December as firms apparently prefer staying sideways as higher minimum wages, fiscal austerity and Brexit risk dent investors’ appetite.

Surprisingly, Eurozone services PMI came in at 54.2 despite the anticipated stagnation at 53.90 due to terrorist attacks in Paris that lead to a heavy atmosphere of insecurity by the end of 2015.


Aussie, Loonie are downbeat

In the FX market, the Aussie outperforms its G10 peers. The five-month up-trending channel base has been broken on the downside. AUD-bears are gaining traction, the 0.70 level against the USD is just around the corner.

Canadian dollar nose-dived below 0.71 for the first time since August 2003. With mounting tensions between Saudi Arabia and Iran, sellers are likely to conquer more land. The WTI is 1.20% lower on the session; the $35 mark is again under pressure.


US dollar stronger before ADP report, FOMC minutes

The ADP report and the FOMC minutes from December 15-16 meeting will keep the afternoon busy. The US dollar strengthens before data and minutes. The euro slipped below 1.0730 support against the US dollar, Cable slid to a fresh 9-month low.