European Open: China’s PMI squeeze in a surprise expansion, GBP/AUD turns higher

Asian Indices:

Australia's ASX 200 index fell by -5 points (-0.07%) and currently trades at 7,476.70
Japan's Nikkei 225 index has fallen by -58.65 points (-0.21%) and currently trades at 27,374.75
Hong Kong's Hang Seng index has fallen by -251.46 points (-1.14%) and currently trades at 21,818.27
China's A50 Index has fallen by -142.96 points (-1.02%) and currently trades at 13,922.19

UK and Europe:

UK's FTSE 100 futures are currently down -21 points (-0.27%), the cash market is currently estimated to open at 7,763.87
Euro STOXX 50 futures are currently down -17 points (-0.41%), the cash market is currently estimated to open at 4,141.63
Germany's DAX futures are currently down -65 points (-0.43%), the cash market is currently estimated to open at 15,061.08

US Futures:

DJI futures are currently down -3 points (-0.01%)
S&P 500 futures are currently down -22.75 points (-0.19%)
Nasdaq 100 futures are currently down 0 points (0%)

China’s PMI beat expectations and expanded, which could give global growth prospects a boost as China continues to reopen
According to official data from NBS, the services PMI rose 54.4 compared with 52 forecast, and manufacturing squeezed in a slight expansion of 50.1 compared with the 48.2 forecast
AUD was the weakest major overnight after (much) weaker than expected retail sales reveals December is producing increasingly disappointing numbers
Despite this, oil prices have continued lower and reached out initial downside target mentioned in yesterday’s European report, which now brings trend support on the daily chart into focus
There’s quite a few data points for Europe including GDP and inflation for France and Germany, although none of it is considered ‘top tier’
So we could be in for a low volatility session like yesterday, given we’re fast approaching the FOMC meeting which tends to stifle volatility anyway
With that said, implied volatility is creeping higher for FX majors as traders attempt to hedge their risk on the options market
Equity sentiment remains caution ahead of the FOMC meeting tomorrow, with index futures markets pointing to a weak open and looking past stronger data from China

GBP/AUD daily chart:

GBP/AUD trades within a bearish channel on the daily chart, but appears to be within a countertrend move.

Weak retail sales has helped GBB/AUD recover back above the November low, having already printed a long bullish hammer with a couple of small inside candles (DOJI’s) to show bears were losing steam. A buy signal has been generated on the stochastic oscillator, which also produced a bullish divergence relative to the two recent price action lows. Given GBP/AUD has the ability to generate decent swings, then we like the pair for a potential long setup over the near-term.

Bulls could seek a move towards 1.7700 near the 100 and 200-day EMA’s on the daily chart, or seek bullish continuation patterns on the 1 or 4-hours charts to increase the potential reward to risk ratio.

Economic events up next (Times in GMT)

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.