Asia has started the new year in positive mood especially after some better than expected China data. The Chinese PMI rose to 51.9 from an expected 50.7 forecast helping the core markets register a 1%+ increase today. This comes on the heels of a change in the calculating factors for the Yuan. As we reported last week the calculation continues to move away from the expensive US Dollar and will now be measured against an increased basket of currencies. This move has the potential to make Chinese exports cheaper and imports more expensive. However, the obvious impact will weaken the currency core and therefore be supportive for the Shanghai index which will be helpful as money leaves the country seeking a safe-haven. The PBOC fixed the Yuan today at 6.9552. The Hang Seng also closed stronger up 0.65% on the day.

The positive mood from Asia also spread into Europe where markets went from strength to strength. We even saw the UK’s FTSE set a record high early afternoon but drifted by the close. That did not stop the index from closing at an all-time high 7,177 (+0.5%) on the day. Spain registered the best return closing +0.8% higher with CAC also better at +0.35%. The DAX did trade higher but could not hold onto these gains and drifted into negative territory by the close. The balance for these moves was the Euro which suffered directly against the USD as we traded below the psychological 104 level yet again. The GBP was also weak losing 0.8%, Yen lost 0.9% whilst the broader DXY gained 1% on the day to close at 103.25.

Initially, the US markets saw some encouraging momentum which tended to fade towards the close. This unloved rally continues to be doubted and the new year has not changed people’s perception of the most unloved rally in many years. Oil prices traded heavy closing down over 2% but also Treasuries reversed early gains with 10’s trading back to the 2.50% level again. The stronger than expected ISM number turned the bond market, which resulted in a 3bp steepening of the curve. 2’s closed 1.21% with 10’s at 2.45%. German 10’s closed 0.26%, Italy 1.86%, Greece 6.82%, Turkey 11.20%, Portugal 3.87% and UK Gilts 1.33%.

Investment and financial consultancy services are offered on behalf of Armstrong Economics. PEI does NOT provide personal guided advice for any individuals regardless of residency or nationality. PEI provides forecasting based upon objective computer models in most leading financial centers worldwide through its affiliates and/or representative arrangements. The information provided is believed to be reliable, however accuracy and completeness are not guaranteed. This information is offered to professional investors and institutions. PEI does trade on a proprietary basis in selected markets around the world. PEI accepts NO managed accounts on behalf of any individuals no matter the country of residence or origin. PEI predominantly engages in hedging contracts and currency overlay business on behalf of business and institutions. Individuals seeking to use the forecasting services of PEI should seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content relative to their personal financial investment situation. Keep in mind that a forecast in the local currency of that instrument may prove to be correct but a swing in the underlying currency can make that same forecast dangerous to someone investing in a different currency.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD clings to 3.5-week’s high, trades above 1.1000 figure

The pair is challenging the 1.1047 resistance. EUR/USD bull recovery from 34-month lows remains intact. Further coronavirus headlines are awaited.


GBP/USD hits new 2020 low and bounces amid Brexit rhetoric, coronavirus headlines

GBP/USD is trading above 1.2800 after hitting a new 2020, nearing the 1.2700 figure, as concerns about a no-trade-deal Brexit are weighing on the pound. Modest recovery seen in USD during the American session keeps the bearish pressure intact.


XAU/USD tumbles near two-week’s lows, sub-$1600/oz

Gold has been dropping sharply this Friday while reaching the 200 SMA on the four-hour chart. XAU/USD bulls gave up as sellers took the market down sharply. The bears seem to be in charge and more down could potentially be expected. 

Gold News

WTI remains under pressure around $45.00

Nothing new around crude oil prices, with rising concerns on the Chinese COVID-19 and its potential impact on the economy and the demand for the commodity keeping traders’ sentiment well depressed.

Oil News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors