Trading news

Chinese stocks halt trading once again, crude oil to 11-year low, Germany: consumption lowers but industry recovering

- Stock markets across the globe are moving deeper in negative territory and we have the feeling it is now legitimate to wonder whether this is just a panic reaction or the beginning of a crisis
- The market’s wait-and-see mindset over the last few months has demonstrated that investors couldn’t find any reason to push stocks higher and that a period of correction was highly likely given the build-up of uncertainty.
- Safe-haven currencies continue to be favoured by investors in these times of panic with JPY and CHF among the two biggest winners  
- USD/JPY broke the strong 118.07 support but still need to validate a clear break before moving toward the next key resistance area between 116.18 and 115.57. The latter is a very strong level and we therefore expect a rebound around those levels if reached
- Commodity currencies may further extend their losses as the Aussie falls 0.34% and the Loonie 0.36% 
- Mixed economic data for Germany show a pretty good situation for European’s most competitive economy although other EU countries continue to struggle with growing debts keeping us bearish on EURUSD with a target of 1.0700
 
The equity market suffered another massive sell-off in Asia. Chinese stocks halted trading after only 30 minutes as the CSI 300 dropped almost 7%. The index ended the session down 6.93%, while the Shanghai and Shenzhen Composite dropped 7.04% and 8.24% respectively. The China Securities Regulatory Commission tightened trading rules in an attempt to contain the ongoing sell-off by declaring that major shareholders couldn’t sell more than 1% of a company’s share over a period of three month starting January 9th. All the other markets across Asia were also caught in the sell-off but not to the same degree. In Hong Kong, the Hang Sang fell 2.60%, in Australia the ASX was down 2.20%, in Singapore the STI retreated 2.52% and in New Zealand the NZX did pretty well, compared to its peers, and edged lower by 0.78%.
 
Stock markets across the globe are moving deeper in negative territory and we have the feeling it is now legitimate to wonder whether this is just a panic reaction or the beginning of a crisis. The market’s wait-and-see mindset over the last few months has demonstrated that investors couldn’t find any reason to push stocks higher and that a period of correction was highly likely given the build-up of uncertainty. European futures are also wearing red as fear spreads, the DAX is down 2.95%, the CAC 2.63%, the Footsie 2.10%, while the SMI fell 1.67%.
 
In the FX market, safe-haven currencies continue to be favoured by investors in these times of panic. The Japanese yen and the Swiss franc were the two biggest winners of the Asian session with a performance of 0.38% and 0.23% against the greenback. Gold also took advantage of the situation and rose 0.34%, while Silver was close behind, up 0.31%. USD/CHF is recovering from an early session sell-off and is currently trading at around 1.0050 as I write this. USD/JPY broke the strong 118.07 support (low from October 15th) but still needs to validate a clear break before moving toward the next key resistance area between 116.18 and 115.57. The latter is a very strong level and we therefore expect a rebound around those levels if reached. Overall, the Japanese yen should remain in demand in the short-term.
 
Besides the stock market rout, crude oil dominates headlines as prices print fresh 11-year low. West Texas Intermediate fell another 5.25% and reached $32.18, while its North Sea counterpart, the Brent crude, is trading around $32.23, down 5.84%. Obviously, commodity currencies extended losses as the Aussie fell 0.34% against the US dollar, while the Loonie fell 0.36%. The NOK fell 0.18%, while the Kiwi recovered after a debasement of 3.60% since the beginning of the year, up 0.20%.
 
***Yann Quelenn, market analyst: “November German retail sales disappointed this morning. Data printed below expectations at 0.2% m/m, but above prior data from October. In contrast the manufacturing industry is breathing again, with factory orders having increased 1.5%, above the 0.1% forecast. The annualized data has also come out higher at 2.1% year-on-year. Last year, Germany was able to decrease its unemployment rate to 6.3% from 6.5%. It is also true that companies are competitive and budget surpluses have been generated in the region of €4 billion. The concerning aspect however is that current German growth is mostly driven by consumption, which is currently fading. Moreover, the German economy generated less inflation than expected in December. Yet, despite this Germany remains the most competitive European economy and the only European country capable of controlling its debt-to-GDP ratio, which remains below 80%. Other European countries struggle with the inability to debase the currency and continue to see their debt grow. We remain bearish on the EURUSD and target the pair to head back towards 1.0700.”***
 
Today traders will be watching retail sales and factory orders from Germany; unemployment rate from Denmark; Halifax house prices from the UK; consumer confidence from the euro zone; industrial production from Brazil; initial jobless claims from the US while Fed’s Lacker and Evan will give during the second part of the day.

Thursday, 07 Jan, 2016 / 12:14

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Source : http://en.swissquote.com/fx/news-and-live-signals/home

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