Chinese PMI in contraction territory

<p>The risk sentiment took an initial dent at the start of the trading week, following disappointing manufacturing data out of China. The official Chinese manufacturing […]</p>

The risk sentiment took an initial dent at the start of the trading week, following disappointing manufacturing data out of China. The official Chinese manufacturing PMI reading came in at 49.8 from a consensus forecast of 50.2, as the non-manufacturing data also disappointed at 53.7 from a previous reading of 54.1. The well-respected HSBC PMI survey confirmed the sentiment with a lower reading of 49.7 for January from the December outcome of 49.8.

The CHF was again in focus as a report in the Schweiz am Sonntag newspaper has suggested the SNB are operating ‘a kind of minimum rate against the Euro’. It cited a ‘well-informed source’ as saying the Swiss National Bank will initiate a so-called ‘corridor’ that will keep the EURO/CHF price between 1.05 and 1.10. The source also added that the SNB are willing to spend CHF 10 billion to defend the new initiative. The EUR/CHF price gapped higher from the 1.0385 close on Friday to 1.0430 as early European trading has seen the pair rise further to 1.0585.

The negative headlines from Greece have continued over the weekend as the first round of talks between the Greek government and EU officials get under way. The Greek Finance Minister Yanis Varoufakis stated that Greece will not take any further support under the current agreement, but was willing to negotiate a new deal – although he feels this could take up to four months. German Chancellor Angela Merkel has gone on record to say there will be no compromise on the conditions of the bailout or write-down on the Greek debt structure, as France offers to mediate between Greece and its creditors.

The IMM positioning data shows that dollar longs were reduced by $1.9 billion last week mainly against the JPY, as the euro and sterling shorts remained unchanged. The most important release this week will be the US jobs data on Friday, as the RBA meeting tonight with also gather significant interest following speculation of a dovish outcome. The US ISM manufacturing data this afternoon will be Monday’s highlight.

 

 

EUR/USD
Supports  1.1260-1.1200-1.1100   | Resistance 1.1370-1.1400-1.1430

 

 

USD/JPY
Supports  116.50-116.05-115.80  Resistance  117.80-118.30-118.80

 

 

GBP/USD
Supports  1.5000-1.4950-1.4880 Resistance  1.5100-1.5150-1.5280

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