The start of the new year brings a revival of trade, which for the currency market mainly means USD sales. EUR / USD and USD / JPY are gaining new levels closer to 1.15 and 109 respectively. More pressure concerns only AUD and NZD in the company of the stock market in Asia, where the pressure was created after disappointing data from China.
On Wednesday, the 2nd of January, the event calendar is light in important data releases, but the global investors should keep an eye on PMI Manufacturing data from Germany, France, Spain, Italy, UK and the whole Eurozone being released early in the morning. During the US session, Canada and the US itself will publish their PMI Manufacturing data as well.
EUR/USD analysis for 02/01/2018:
China's December Caixin manufacturing PMI fell from 50.2 in November to 49.7, in line with the official manufacturing PMI, which fell from 50.0 to 49.4. Together with a fall in industrial profits of 1.8%YoY in November from +3.6%YoY in October, and softer retail sales growth (8.1% in November from 8.6% in October), the global investors have a clear indication that the economy is weakening.
The Chinese HSBC Manufacturing PMI is a composite indicator designed to provide an overall view of activity in the manufacturing sector and acts as a leading indicator for the whole economy. When the PMI is below 50.0 this indicates that the manufacturing economy is declining and a value above 50.0 indicates an expansion of the manufacturing economy. Flash figures are released approximately 6 business days prior to the end of the month. Final figures overwrite the flash figures upon release and are in turn overwritten as the next Flash is available. The Chinese HSBC Manufacturing PMI is concluded from a monthly survey of about 430 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market has broken through the local technical resistance zone located between the levels of 1.1442 - 1.1471 and made a new local high at 1.1495 on its way up. The zone between 1.1493 - 1.1499 is a resistance zone as well so the bulls might have some problems there, but the momentum is still strong and positive, which supports the short-term bullish outlook. In a case of a further rally, the next target for bulls is seen at the level of 1.1533 and 1.1550.
