The EUR/USD consolidated in the tight range of 1.0406/1.0435 in Asia, after having tanked to 1.0366 Frankfurt yesterday. The growing gap between the US and EU yields is increasingly supportive of further euro depreciation. Traders are chasing top selling opportunities. Offers are touted at 1.0485 / 1.0500 and 1.0560.
Due today, the headline inflation in the Eurozone is expected to have accelerated at the stable pace of 0.6% year-on-year in November. The core inflation is seen steady at 0.8%y/y. A soft read could further weigh on the single currency, while a solid data could encourage a minor correction in the EUR/USD after the pair lost five big figures against the US dollar in one week.
The USD/JPY extended gains to 118.65, boosting the Japanese stocks in Tokyo. Nikkei (+0.75%) and Topix (+0.49%) rallied to year’s highest levels as Japanese exporters continued surfing on the cheaper yen. The 20000 handle is right around the corner and there are no major reasons to stop the Nikkei from rising.
Chinese stocks closed the week deeply in the red. Weaker yuan and concerns regarding the US-China relationship under Donald Trump’s rule have taken their toll on Chinese stocks. China also revised its growth forecast to 6.5% earlier this week.
This year, the Shanghai Composite has been totally left outside the global stock rally. Both stock and bond investors remain increasingly sceptical regarding Chinese markets. Chinese sovereigns recorded their biggest weekly decline in seven years.
Australia’s mining and energy stocks wrote-off 1.27% despite firmer oil and commodity prices.
The pound was better bid in Asia. Overnight session pulled the GBP/USD slightly higher to 1.2436. The Bank of England maintained the status quo at Thursday’s MPC meeting. The bank said that the recent recovery in the pound could contain inflationary pressures.
US and European futures gained in Asia, as stock traders rapidly recovered from the Fed hangover. The DAX and CAC futures gained past one percent in Asia. Appetite in FTSE stocks remained limited (+0.06%), with limited motivation to get involved on the buy side above 7000 pence.
The FTSE 100 stocks are expected flat at 7000 at the open, the DAX is called 16 points higher at 11382.