Weak Chinese GDP data has dented market confidence, despite the better than expected retail sales and industrial production figures. Meanwhile, the European focus is on UK parliament as the next stage of the Brexit debate takes place.

  • Mixed open for European markets

  • Chinese data proves mixed, yet Yuan weakness highlights market scepticism

  • All eyes on May, with Brexit set to dominate today

European markets have kicked off the weak in typically indecisive fashion, with a raft of conflicting data points from China and a focus on Brexit expected to drive price action through the day. With the US observing Martin Luther King day, European traders are expecting lower volumes and thus potentially higher volatility. That being said, beyond an update from Theresa May, markets are somewhat devoid of market moving events, with the Chinese data released overnight providing the basis for market sentiment outside of the UK today.

The Chinese economy exhibited the lowest quarterly GDP growth rate since 2009 in Q4, with the reading of 6.4% providing the third consecutive fall in the indicator. Promises of a stimulus package for the Chinese economy have certainly helped ease the fears over a continued slowdown, yet the fact is that a trade breakthrough with the US is required to fully appease markets. Despite the headline GDP reading providing precious little reason for optimism, the improved industrial production and retail sales figures for December go some way to showing that there is some form of improvement within the widespread decline in Chinese economic data. Unfortunately, while we saw substantial upside for the Chinese Yuan in the wake of a seemingly positive US-China trade summit, the subsequent upside in USDCNH highlights the resurgent scepticism over whether a deal is anywhere near being reached.

Today will see Theresa May address the Commons, with the PM expected to lay out exactly how she plans to break the deadlock and avoid a no-deal Brexit. Markets will be on the lookout for the amendments that MPs will be expected to table in response to her motion for a vote on 29 January. Key to this will be the possibility of an amendment which takes a no-deal Brexit off the table; something which GBP bulls would celebrate no doubt. Also keep an eye out for talk of a potentially extended article 50; something which is looking like a necessary given the political deadlock that currently dominates parliament.

Ahead of the open we expect the Dow Jones to open 108 points lower, at 24,598.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD bouncing modestly on disappointing US Consumer Confidence

The shared currency remains pressured by the idea that the ECB will come out with massive stimulus measures in September. US Michigan Consumer Confidence down to 92.1 brakes dollar's gains.


GBP/USD retreats sharply after approaching 1.2200

The GBP/USD pair came under selling pressure after flirting with weekly highs, as a dismal US confidence report brought back risk-off. GBP/USD still up for the week and above the critical 1.2100 level.


USD/JPY: Greenback makes modest progress against Yen, near 106.30

The demand for Yen as a safe-haven currency has been weak in the last three days. The levels to beat for bulls are at the 106.30 and 106.55 resistances.


Four Signs of A Bear Market

I am a believer that the Universe gives you signs. That may sound a bit crazy, but these three charts are three more signs of a bear market. The top chart is the GLD exchange traded fund.

Read more

Gold gives back territory towards a 23.6% retracement

Gold prices were a touch lower by the end of the week, falling -0.68% having travelled between a high of $1,528.00 to a low of $1,503.87, ending the NY session around $1,513. 

Gold News