Global markets

The global markets were awoken by further concerns over the ongoing decline in economic momentum for the Chinese economy following the weak Caixin December manufacturing PMI of 48.2 which was released in the early hours of this morning. This tepid manufacturing announcement compounds to the recent data from China which have followed a negative trajectory that has consequently intensified the growing anxieties around the pace of growth of the world’s second largest economy. Asian equities received direct punishment as renewed fears around China’s growth triggered an aggressive 7% selloff in the Shanghai Composite Index, while the CSI 300 plummeted 7.02% triggering a circuit break which suspended trading in the China markets for the rest of the session. Sentiment remains bearish for the Chinese economy and with manufacturing data outlining further economic weakness in China, concerns could elevate further ahead of the China CPI report which will be released on Saturday morning.

This meek start of the trading session trickled down into the European equity arena with the FTSE100 experiencing a deep decline taking prices down to the 6050 support. The FTSE100 remains under intense pressure from the persistent concerns over the resumption of selling in the commodity markets and with mining stocks still looking vulnerable from the instability in WTI oil, prices may be open to further losses. With investors parting away from riskier assets amid the rise of geopolitical tensions between Saudi Arabia and Iran, bearish investors may take this opportunity to send the FTSE100 towards 5960.

From a technical standpoint, prices are trading below the daily 20 SMA and the MACD has also crossed to the downside. A breakdown below 6050 may encourage sellers to send prices to the next relevant level based at 5960.

EURUSD

The EURUSD continues to trade in a very wide range since the events of the 3rd of December when the European Central Bank’s decision to extend Quantitative easing till March 2017 caused an aggressive appreciation within the Euro. For the past trading month prices have bounced from the 1.080 support all the way to the 1.1050 resistance. Fundamentally the EURUSD remains bearish and a breakdown below 1.080 should encourage sellers to send prices to the next relevant support based at 1.064.

NZDUSD

The NZDUSD is technically bullish on the daily timeframe as there have been consistently higher highs and higher lows. Prices are currently trading above the daily 20 SMA and the MACD still trades to the upside. A solid breakout above 0.6850 may encourage buyers to send prices towards the next relevant resistance based at 0.7050. If the pair declines back below the new higher low of 0.6680, then this daily bullish outlook becomes invalidated.

USDJPY

This pair is heavily bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has also crossed to the downside. The breakdown below the 120.0 support has encouraged sellers to send prices towards the 118.50 level which was discussed in the market report of the 24th of December.

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