MARKET BRIEFING – LONDON OPEN 05.01.2016
Following on from depressing PMI data from China that sent equity values crashing on the Shanghai and Shenzhen Stock Exchanges, Monday afternoon saw weak US data add to the rather woeful start to 2016.
Yesterday afternoon the Institute for Supply Management contributed further to investor concerns by announcing an ISM Manufacturing PMI number fell short both of expectations and the prior month’s publication.
The market had expected that the ISM would publish data that was in line with the 49.1 forecast, however, the release of 48.2 even failed to beat the prior months 48.6 reading. Readings that are below 50.0 indicate manufacturing activity is contracting.
This poor reading means that for the December 2015 reporting period that manufacturing in the World’s largest economy has contracted by the greatest amount for six years.
The drop off in manufacturing activity can be blamed on the low price of Crude and the impact of the strong US Dollar which has hampered the efforts of the country’s exporters. Furthermore, anaemic growth which goes hand in hand with a lack of demand from the global economy continues to hinder local manufacturers.
There was additional bad news from the Construction sector when the US Census Bureau announced that construction spending had declined by -0.4%. The markets had expected a release to be in line with the 0.7% forecast and to at least beat the prior months 0.3% reading.
With Monday’s domestic data being so poor, the US markets took their cue from China as both the Dow Jones and S&P 500 slipped substantially lower on the first trading day of 2016.
January has only just begun and with a lot of data and news driven event risk to be announced tomorrow. This includes the ADP jobs number, ISM non-manufacturing PMI. Crude Oil Inventories and the all-important FOMC Meeting Minutes.
With so much news hitting the wires, investors will be looking and hoping for positive signs which will support the US equity markets.
EURUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.0915
Target 2: 1.0740
Projected range in ATR’s: 0.0089
Daily control level: 1.0945
GBPUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.4810
Target 2: 1.4615
Projected range in ATR’s: 0.0098
Daily control level: 1.4815
USDJPY
The intraday technical outlook
Trend 1 hour: Down
Target 1: 120.25
Target 2: 118.60
Projected range in ATR’s: 0.84
Daily control level: 120.50
USDCHF
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.0110
Target 2: 0.9930
Projected range in ATR’s: 0.0089
Daily control level: 0.9920
USDCAD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.4060
Target 2: 1.3845
Projected range in ATR’s: 0.0107
Daily control level: 1.3870
AUDUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 0.7260
Target 2: 0.7110
Projected range in ATR’s: 0.0075
Daily control level: 0.7330
GOLD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1086.00
Target 2: 1060.00
Projected range in ATR’s: 12.90
Daily control level: 1058.00
OIL
The intraday technical outlook
Trend 1 hour: Up
Target 1: 38.90
Target 2: 36.35
Projected range in ATR’s: 1.27
Daily control level: 36.70
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