European Summary and Highlights 8 Jan

European morning session
 

A quiet European morning session saw some mild weakness in the AUD and some initial strength in the CHF, but otherwise relatively little FX movement. AUD dropped around 10 pips to 0.6695, suffering from the aftermath of the Zhongzhi bankruptcy overnight, while EUR/CHF initially fell around 25 pips to 0.9290 in reaction to stronger than expected Swiss CPI data for December. This showed a 1.7% y/y rise against market expectations of a 1.5% gain. November retail sales were also stronger than expected, but the initial drop was largely reversed by the end of the morning. 

EUR/USD and USD/JPY were little changed. German November trade data showed a stronger than expected 3.7% rise in exports and 1.9% rise in imports, and a larger than expected EUR 20.4bn trade surplus. German November manufacturing orders were a little weaker than expected, rising 0.3% m/m, so only marginally above the October level which equalled the lowest since the pandemic. 
 

Asia Session

The Chinese Wealth Manager "Zhongzhi" had its difficulties earlier in November but has official declared bankruptcy over the weekend. Its heavy linkage with the property development sector has dragged the company into insolvency. It seems to suggest such shadow banking in China may continue to have a shake out if there is no improvement in the property sector. The Chinese and Regional equities sunk on the poor sentiment and see AUD/USD dragged 0.24% lower to 0.67, NZD/USD is also 0.13% lower at 0.6236 while USD/CAD rose 0.13% to 1.3373 as oil slipped more than a dollar as Saudi Aramco is cutting price globally.

USD/JPY was trading higher in the opening hour but as session progress, the sour risk sentiment seems to have attracted bids to the haven JPY. Japanese market are closed today and most will be waiting for Toyko CPI on Tuesday and labor cash earning later to assess the pace of policy change from the BoJ. 10yr JGB yields continue to stay depressed around 0.6% which seems to be limiting current JPY strength. USD/JPY is now trading 0.12% lower at 144.41. Elsewhere, EUR/USD is 0.04% lower and GBP/USD is 0.12% lower.