European Open: EUR/GBP rally stalls at key highs, German data in focus

Asian Indices:

Australia's ASX 200 index fell by -92.5 points (-1.31%) and currently trades at 6,946.20
Hong Kong's Hang Seng index has risen by 257.88 points (1.3%) and currently trades at 20,039.29
China's A50 Index has fallen by -55.7 points (-0.43%) and currently trades at 12,948.41

UK and Europe:

UK's FTSE 100 futures are currently down -8.5 points (-0.11%), the cash market is currently estimated to open at 7,443.24
Euro STOXX 50 futures are currently down -24 points (-0.62%), the cash market is currently estimated to open at 3,832.09
Germany's DAX futures are currently down -61 points (-0.43%), the cash market is currently estimated to open at 14,008.26

US Futures:

DJI futures are currently up 53 points (0.16%)
S&P 500 futures are currently up 9.25 points (0.08%)
Nasdaq 100 futures are currently up 5 points (0.13%)

Weak PMI data from China over the weekend and today weighed on equity market sentiment across Asia. The ASX 200 fell to an 8-week low during its worst session in seven, and now trades below 7,000. However, China’s equity markets went on to rally despite initially gapping lower, as recovery hopes from their reopening countered the negative sentiment. European index futures point to a weak open for the first trading day of the year.

The baulk of today’s economic data is from Germany, with employment data at 08:55 GMT then inflation at 13:00. UK manufacturing PMI is scheduled for 09:30, then manufacturing PMI data is then released for Canada and the US at 14:30 and 14:45 respectively.

EUR/GBP daily chart:

EUR/GBP has been rising along with GBP-EUR yield differentials as traders price in a more hawkish ECB in 2023. However, the rally lost steam as it approached the October highs and produced a couple of low liquidity Doji’s below that key level. Momentum ha turned lower today so we suspect an interim top has formed and prices are due to pull back towards 0.8800. Also take note that the 20-day EMA is near the monthly pivot point around 0.8760 which makes it a potential target for a deeper pullback.

Economic events up next (Times in GMT)

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor