Forensic analysis of some very interesting price action over the Christmas/New Year period will be on the cards as traders return to their desks this week.
– On Forex markets, the euro made a multi-month high at 1.3893 just after Christmas and then fell out of bed (1.3585) when Goldman Sachs said fair value was something closer to 1.32. Gold has made a round trip to the low of the year at $1180 but is back above $1236 in Friday trade. The question for traders is, have both trends turned?
– Likewise stocks made a new high last week with the S&P 500 hitting 1843 in Futures terms but it’s off a little more than 20 points at 1820 (physical 1831) on Friday night. On commodity markets, Nymex crude printed above $100 but then fell $6 in four trading sessions to close Friday at $94.19 Bbl.
– More recently though, looking back to Friday’s trade and we see that the weaker-than-expected Chinese manufacturing PMI’s on Thursday and Friday of 50.5 and 64.6 respectively weighed on markets with Copper and Oil getting hit. Like many other markets, Copper had pushed sharply higher in thin liquidity, trading to $3.44 lb and completing a run from a low around $3.15 lb in mid-November. So the question of whether it’s really China or just liquidity coming back into the market is a reasonable one.
– At the close, the Dow was up 0.17% to 16,470, the Nasdaq fell 0.27% and the S&P was largely unchanged losing just 1 point to 1831. In Europe it was a more positive day with the FTSE up 0.19%, the DAX up 0.37% and the CAC was 0.49% higher. In Milan, the FTSE MIB rose 0.97% while in Spain, the IBEX 35 fell 0.39%.
– On the ASX’s Sydney Futures Exchange, the SPI 200 March contract rose 23 points to 5330.
– On FX markets, in what were thin conditions, the euro’s reversal off the levels near 1.39 continued with the single currency dropping 90 points from the open to close at 1.3585. USDJPY, on the other hand, recovered 100 points from the day’s low, finishing the week at 104.79, while the pound lost a little ground to finish at 1.6418. The Aussie had its first positive week for 11 weeks and seems to have found a base for the moment in the low 88 cent region. It closed the week at 0.8945 but off the high of 90 cents earlier in the day.
– On commodity markets, Crude lost 1.55% to $94.31 Bbl, Gold gained 1.09% or $13 to $1236 while Copper lost 0.74% to $3.40 lb. On the Ags, Corn, Wheat and Soybeans were amongst the worse performing markets in 2013 but finished Friday higher, rising 0.71%, 1.47% and 0.17% respectively.
– Bitcoin has spent the last two weeks steadily recovering from the mid-December lows around $540 and finished the week at $920, but is $1016 this morning.
On the data front today, it is a monstrous day for HSBC and Markit Services PMI’s with China and Germany the big ones. In Australia, we have our own version in the Australian Industry Group performance of services index and the US has the ISM non-manufacturing out tonight. Also out tonight, German CPI will give a lead on ECB policy as Europe increasingly looks to be heading down the Japanese road toward deflation.