China s GDP numbers on the limelight Euro remains under pressure against other major currencies

All eyes will be on China’s fourth quarter GDP print today when markets resume trading in Asia.

US markets were closed overnight for the Martin Luther King holiday. Stocks rallied in Europe despite the European Financial Stability Fund (EFSF) being downgraded by S&P – a largely expected event following Friday’s downgrade to France.

The Stoxx Europe 300 Index managed to post a 0.8% rise overnight while S&P500 index futures in the US were pointing to a 0.2% rise when markets resume trading tonight Asian time. French bonds rallied after borrowing costs fell at the first bond auction since Friday’s downgrade – a sign that the market is now looking forward.

The European central bank also acquired more Italian and Spanish debt – an indication that it is not willing to see a complete fallout of contagion across the region.

Still, the Euro remains vulnerable against the US dollar, last trading at around 1.2665. The US dollar against the Japanese Yen remains in a tight trading range between 76.50-77.00, last at 76.77.

China’s GDP number is the key event. Overnight, copper rallied US$4/lb in anticipation of a strong fourth quarter GDP print for the world’s second largest economy. Copper is now trading comfortably above the US$3.30-US$3.60/lb range where consolidation was expected.

The breakout combined with a short rally in the Australian dollar, last trading at around 1.0310 against the US dollar, means anything nothing short of an 8.7% year-on-year GDP print will disappoint the market.

Market estimates are for the quarter-on-quarter growth rate to have come down from 2.30% previously to 2% flat in the fourth quarter.