QUICK TAKE: US Dollar Firms, Silver Soars After Becoming Next Retail Target
Equities: Markets have staged a modest recovery from Friday’s weak close. Softer than expected Chinese Manufacturing PMI data did little to dent broader sentiment, with the exception of Chinese markets which underperformed overnight. That said, the positive spillover from the APAC region has seen European markets track higher with US futures
Chinese Manufacturing PMI (Jan) 51.3 vs Expected 51.6
- Non-Manufacturing PMI 52.4 vs Expected 55.0
- Caixin Manufacturing PMI 51.5 vs Expected 52.7
Euro Stoxx 50 Sector Breakdown
Outperformers: Technology (2.4%), Basic Materials (2%), Consumer Discretionary (1.5%)
Laggards: Energy (-0.4%), Utilities (0.5%), Industrials (1.1%)
Intra-day FX Performance
USD: The USD has begun the new month on the front foot, although, remains well within its recent range with the 91.00 handle continuing to cap upside. The Euro slide shows little signs of abating with EUR/USD breaking below 1.21. German retail sales saw a sizeable 9.6% contraction for December, significantly below expectations. Elsewhere, the Japanese Yen has remained on the backfoot with USD/JPY at two-month highs to test 105.00, last week’s breach above the descending trendline stemming from March reinforces the bullish view in the short-run. Although, I will be paying close attention to topside resistance at 105.00 and 105.40 as to whether the momentum will persist.
Chart to Watch: Can the Bulls Persist with USD/JPY
Commodities: Silver has become the next target in this current retail frenzy, which saw the precious metal soar 11% to hit $30/oz. Although, as it stands, this appears to have had a muted impact on similar assets such as gold, which is up by a modest 1%. In turn, the gold/silver ratio resides at a near 7-year low.
Silver Price Chart: Daily Time Frame
Looking ahead: While silver is grabbing the media attention. There is a plethora of tier one data points this week, with ISM Manufacturing PMI due as well as the RBA decision tonight.