Quiet Asian session, China closed for New Year

Market Brief

After Friday’s market turmoil, we are having quiet start into the week as most Asian markets are closed for holidays. Japanese equities traded higher for the second consecutive day as the JPY paired losses. The Nikkei was up 1.10% while the broader Topix index edged up 0.84%. US futures were trading mostly higher in Asia after the S&P 500, the Nasdaq and the Dow Jones fell 1.85%, 3.25% and 1.30% on Friday amid mixed job report. As usual, the report contained both good and bad signals. The US economy generated only 151k private jobs in January (versus 190k median forecast) while December’s reading was downwardly revised to 262k from 292k. On the bright side, the unemployment rate fell below the 5% threshold to 4.9%. Finally, wage pressure continued to build up in January as earning per hours rose 0.5%m/m (vs 2.2% consensus) or 2.5% on the year-over-year basis (versus 2.2% expected). In our opinion, the uptick in wage growth should be definitely be more than welcomed by the Fed as sustainable wage inflation was the missing ingredient that could help the central bank to reach its inflation target and therefore to resume its rate tightening process. After Friday’s sharp gains, the greenback consolidated during the Asian session. EUR/USD trader range-bound between 1.1128 and 1.1151.

On Sunday, China released a snapshot of its foreign exchange reserves. The market was expecting a decrease of $120bn as the PBoC fought to support a weakening yuan. However, data showed that the reserves contracted by only $90bn to $3.23tn. China’s war chest has been shrinking consistently since June 2014, when it reached $3.99bn. Chinese markets will be closed the entire as the country celebrate the New Year.

European futures are pointing to a higher open with the German DAX up 0.33%, the CAC 40 +0.43% and the SMI +0.09 as investors still try to determine whether Friday’s job report was a good thing or not. On the FX side, EUR/CHF gave up earlier gains as it returned below the 1.11 threshold. However, the single currency found a strong support at around 1.1050. Commodity currencies were the biggest winners of the session as crude oil prices stabilised above $30 a barrel. The Australian dollar soared 0.67% against the greenback, erasing partially last week’s sharp losses. AUS/USD is about to test the 0.7136 resistance implied by its 50dma; on the downside a hourly support can be found at around 0.70 (psychological level).

Today traders will be watching current account balance from Denmark; industrial production from Turkey and Spain; building permits from Canada; sight deposit from Switzerland.

Global Indexes	Current Level	% Change
Nikkei 225 Index	17004.3	1.1
FTSE futures	5822.5	0.5
DAX futures	9297.5	0.33
CAC futures	4218	0.43
SMI Futures	7892	0.09
S&P future	1880.2	0.26
DJIA futures	16237.5	-1.07

Global Indexes	Current Level	% Change
Gold	1166.65	-0.61
Silver	14.94	-0.48
VIX	23.38	7.05
Crude wti	31.07	0.58
USD Index	97.09	0.06

Today's Calendar	Estimates	Previous	Country/GMT
DE Dec Current Account Balance	12.0b	12.2b	DKK/08:00
DE Dec Current Account (Seasonally Adjusted)	-	11.9b	DKK/08:00
DE Dec Trade Balance ex Ships	6.2b	5.7b	DKK/08:00
TU Dec Industrial Production MoM	1,20%	-0,90%	TRY/08:00
TU Dec Industrial Production YoY	3,60%	3,50%	TRY/08:00
SP Dec Industrial Output NSA YoY	-	5,70%	EUR/08:00
SP Dec Industrial Output SA YoY	4,10%	4,20%	EUR/08:00
SP Dec Industrial Production MoM	-	0,00%	EUR/08:00
SZ Feb 5 Total Sight Deposits	-	472.7b	CHF/08:00
SZ Feb 5 Domestic Sight Deposits	-	407.3b	CHF/08:00
EC Feb Sentix Investor Confidence	7,4	9,6	EUR/09:30
NE ECB's Walter, Dutch Minister Dijsselbloem Speak in Amsterdam	-	-	EUR/11:00
IN 4Q GVA YoY	7,10%	7,40%	INR/12:00
IN 4Q GDP YoY	7,10%	7,40%	INR/12:00
IN 1Q A GDP Annual Estimate YoY	7,40%	7,20%	INR/12:00
CA Dec Building Permits MoM	6,20%	-19,60%	CAD/13:30
CA Feb 5 Bloomberg Nanos Confidence	-	52,1	CAD/15:00
US Jan Labor Market Conditions Index Change	2,5	2,9	USD/15:00
CA Bank of Canada Deputy Lane Speaks in Montreal	-	-	CAD/16:45
NZ Jan ANZ Truckometer Heavy MoM	-	2,60%	NZD/21:00
AU Feb 7 ANZ Roy Morgan Weekly Consumer Confidence Index	-	111,2	AUD/22:30

Currency Tech

EURUSD
R 2: 1.1495
R 1: 1.1387
CURRENT: 1.1158
S 1: 1.0711
S 2: 1.0524

GBPUSD
R 2: 1.5242
R 1: 1.4969
CURRENT: 1.4541
S 1: 1.4081
S 2: 1.3657

USDJPY
R 2: 125.86
R 1: 123.76
CURRENT: 117.11
S 1: 115.57
S 2: 105.23

USDCHF
R 2: 1.0676
R 1: 1.0328
CURRENT: 0.9920
S 1: 0.9786
S 2: 0.9476

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot