The Caixin survey of the Chinese services sector came in at 53.9, and traders were anticipating a reading of 51.8, and the previous report was 51.9. Earlier in the week the rate of expansion in the Chinese manufacturing sector ticked up according to the Caixin survey. Beijing are making a concerted effort to move the economy away from heavy industry and more towards a services based one.
US stocks finished on a high note last night as the S&P 500 closed above 2700 for the first time, while the Dow Jones and the Nasdaq 100 racked up respectable gains too. The bullish momentum is still doing the rounds as investors expect President Trump’s tax reforms to have a positive impact on the US economy.
The Federal Reserve also feels the new tax system will also drive economic activity. The minutes from the Federal Reserve meeting last month pointed out the US central bank foresees higher economic growth on the back of the tax cuts, but the central bankers are divided over how much of an economic boost it will bring about. The Fed hiked interest rates three time last year, and some traders feel that will be repeated this year, while others feel there could even be a fourth hike. The outlook of the Fed could undergo a substantial change, as there is going to be a change up in terms of members.
Brent Crude and WTI are in demand as tensions in Iran are fuelling buying pressure. The anti-government protests won’t have a direct effect on oil exports, but in situations like this dealers tend to assume the worst. The county is the third largest member of OPEC, and the images of protestors on the street are spooking traders.
The UK construction sector saw a slower growth rate in December, the reading fell to 52.2 from 53.1 in November. The industry is still expanding, but at a slower pace, and that has been broadly the case since June.
This morning we can expecting the latest services PMI data from Spain, Italy, France, Germany and the UK. The recent manufacturing figures from the eurozone have been impressive, and traders will to see if the services figures can keep up.
EUR/USD – has been edging higher since early-November and if it holds above the 1.2000 mark, it could target 1.2092. Support could be found at the 1.1900 area or at 1.1818 – the 100-day moving average.
GBP/USD – has been pushing higher since March and is above the trend line support which comes into play in the 1.3340 region. Rallies could encounter resistance at 1.3600 or 1.3659. A move below 1.3340 may send the market to 1.3200.
EUR/GBP – has been edging higher since early December, and it has managed to move above the 50-day moving average at 0.8855. If it can hold above 0.8855, it could target the 100-day moving average ay 0.8927. A break below 0.8855 could see it retest 0.8800.
USD/JPY – has dipped below the 50-day moving average at 112.94, and if it remains below that metric it could target the 112.00 region, a break below 112.00 could find support in the 111.00 region. Rallies may encounter resistance at 113.75
FTSE 100 is expected to open 18 points higher at 7689.
DAX is expected to open 67 points higher at 13045.
CAC 40 is expected to open 27 points higher at 5358.
DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.