• PMI data provides evidence of improvement in the Euro Area economy (Beats: France, Germany, Euro Zone, UK)
  • ECB’s Survey of Professional Forecasters painted a picture of stabilization as the forecast horizon was broadly unchanged
  • Far East Lunar New Year holidays begins; coronavirus spreads


  • World Health Organization (WHO) Emergency Coronavirus committee panel Chair: It is a bit too early to consider that virus as a public health emergency of international concern but is an emergency in China; China has taken measures it believes are appropriate to contain the spread of the virus
  • Australia Jan Preliminary PMI Manufacturing: 49.1 v 49.2 prior (3rd straight contraction and record low)
  • Japan Dec National CPI Y/Y: 0.8% v 0.7%e; CPI Ex Fresh Food (core) Y/Y: 0.7% v 0.7%e
  • Japan Jan Preliminary PMI Manufacturing: 49.3 v 48.4 prior (9th month of contraction)


- advertisement -
  • Incoming Bank of England (BOE) Gov Bailey: UK is ill-prepared for asset price falls


  • President Trump expected to sign the USMCA trade deal on Wed Jan 29th at the White House
  • President Trump stated that additional action needed to prevent foreign producers from circumventing tariff rate quotas on large residential washers



  • Indices [Stoxx600 +1.20% at 425.04, FTSE +1.26% at 7,629.55, DAX +1.27% at 13,558.38, CAC-40 +1.26% at 6,047.27, IBEX-35 +0.96% at 9,610.00, FTSE MIB +1.00% at 23,944.62, SMI +0.74% at 10,893.50, S&P 500 Futures +0.18%]

Market Focal Points/Key Themes:

  • European indices in the green following Asia indices higher and higher US futures. Remy Cointreau dives following reporting Q3 sales below expectations and suspending outlook. Ericsson and Givaudan down following earnings results and Nokian Renkaat after issuing soft FY20 guidance. Carrefour up after reporting quarterly sales yesterday after market close. Bayer up on press reports that the company is reportedly holding discussions to reach a $10B settlement regarding RoundUp cancer claim cases. Altice up after unveiling plans to simplify group capital structure. Takeaway and Just Eat down on UK Competition and Market Authority launching merger investigation. Ipsen tanks after pausing dosing in Palovarotene Phase 3 study. NMC Health down after shareholder Emirates NBD Capital sells 2.16M shares at £12.50/shr. Finablr tanks after report that 392M or 56% of company shares have been pledged as collateral for borrowing. Notable earners today include Air Products and Chemicals, American Express and NextEra Energy


  • Consumer discretionary: Carrefour [CA.FR] +4.5% (sales), Remy Cointreau [RCO.FR] -8.5% (earnings), Just Eat [JE.UK] -4% (potential CMA review)
  • Healthcare: Bayer [BAYN.DE] +3.5% (reports on settlement), NMC Health [NMC.UK] -1.5% (placement)
  • Industrials: Nokian Renkaat [NRE1V.FI] -7% (outlook)
  • Telecom: Ericsson [ERICB.SE] -6% (earnings)


  • ECB’s Lagarde stated that policy was not on autopilot during Strategic Review and not necessarily ruling out potential policy changes over the next 12 months
  • ECB’s Knot (Netherland’s) reiterated Council view of seeing signs that underlying inflation was moving higher but too early to be optimistic
  • ECB’s Villeroy (France) stated that he saw stabilization talking root in the region and reiterated Council that fiscal stimulus in region must be stronger and quicker
  • ECB’s Rehn (Finland): Strategic Review would not seek to alter the price stability goal. Fiscal stimulus in EU must be quicker, stronger
  • Eurogroup chief Centeno reiterated view that countries with fiscal space should use it. Germany was such a country that could act
  • (EU) ECB Survey of Professional Forecasters (SPF) painted a picture of stabilization as the forecast horizon were broadly unchanged. Survey maintained 2020 HICP (EU Harmonized CPI) at 1.2% and 2021 HICP at 1.4%. Raised 2020 GDP growth forecast from 1.0% to 1.1% while cutting 2021 growth from 1.3% to 1.2%
  • German Fin Min Scholz: Potentially Trade deal with US could be reached before the US Nov elections (**Note: in-line with Trump commentary on topic)
  • Italy Econ Min Gualtieri stated that it 2019 Budget deficit to GDP to be lower than expected (**Note: current govt forecast is for 2.2%)
  • OPEC+ said to discuss extending the current oil production until end of 2020

Currencies/ Fixed Income

  • FX markets were little phased despite the major Preliminary PMI data for January provided evidence of improvement in the Euro Area economy. The Manufacturing PMI registered beats for all countries (France, Germany, Euro Zone, UK) while Services and Composite reading were mixed (but improving).
  • The UK PMI data was the most closely watched ahead of next Thursday BOE rate decision. GBP/USD tested 1.3170 just after the data release as initial belief was of a lower probability that BOE would cut next week. However, market expectations were only slightly swayed from approx 60% chance to 55% that BOE could cut rates next week.
  • EUR/USD did not find any traction from the better PMI data either as the pair drifted lower to test below 1.1040
  • USD/JPY steady at 109.50 as the coronavirus continued to break out in parts of the far East.

Economic Data

  • (FI) Finland Dec PPI M/M: % v -0.2% prior; Y/Y: % v -0.8% prior
  • (AT) Austria Nov Industrial Production M/M: -1.7 v +0.8% prior; Y/Y: -2.1% v -0.8% prior
  • (RU) Russia Narrow Money Supply Narrow w/e Jan 17th (RUB): 10.78T v 10.80T prior
  • (CZ) Czech Jan Business Confidence: 9.8 v 10.0 prior; Consumer Confidence Index: -2.3 v +2.5 prior; Composite Confidence (Consumer & Business Confidence): 7.4 v 8.5 prior
  • (ES) Spain Dec PPI M/M: -0.5 v -0.6% prior; Y/Y: -1.9 v -2.4% prior
  • (FR) France Jan Preliminary Manufacturing PMI: 51.0e v 50.6e (6th month of expansion); Services PMI: 51.7 v 52.2e; Composite PMI: 51.5 v 52.0e prior
  • (DE) Germany Jan Preliminary Manufacturing PMI: 45.2 v 44.5e (13th month of contraction); Services PMI: 54.2 v 53.0e; Composite PMI: 51.1 v 50.5e
  • (EU) Euro Zone Jan Preliminary Manufacturing PMI: 47.8 v 46.8e (12th straight month of contraction but highest since Aug); Services PMI: 52.2 v 52.8e; Composite PMI: 50.9 v 51.2e
  • (UK) Jan Preliminary PMI Manufacturing: 48.9 v 48.8e (9th straight contraction but highest since April); Services PMI: 52.9 v 51.1e; Composite PMI: 52.4 v 50.7e

Fixed Income Issuance

  • (IN) India sold total INR140B vs. INR140B indicated in 2024, 2031, 2043 and 2049 bonds
  • (ZA) South Africa sold total ZAR1.04B vs. ZAR1.04B indicated in 2029, 2033 and 2050 I/L bonds

Looking Ahead

  • (NG) Nigeria Central Bank Interest Rate Decision: Expected to leave Interest Rate unchanged at 13.50%
  • 05:30 (EU) ECB chief Lagarde on economic outlook at the World Economic Forum in Davos
  • 05:30 (PL) Poland to sell Bonds
  • 06:00 (BR) Brazil Jan FGV Consumer Confidence: No est v 91.6 prior
  • 06:00 (UK) DMO to sell €3.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £1.5B respectively)
  • 06:30 (IN) India Weekly Forex Reserve w/e Jan 17th: No est v $461.2B prior
  • 07:00 (MX) Mexico Nov IGAE Economic Activity Index (Monthly GDP) M/M: No est v -0.5% prior; Y/Y: No est v -0.8% prior
  • 07:00 (CL) Chile Dec PPI M/M: No est v 5.0% prior
  • 07:00 (IN) India announces upcoming bill issuance (held on Wed)
  • 08:00 (PL) Poland Dec M3 Money Supply M/M: No est v 1.2% prior; Y/Y: No est v 9.4% prior
  • 08:00 (RU) Russia Dec PPI M/M: +0.1%e v -0.8% prior; Y/Y: -2.7%e v -6.3% prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:30 (CA) Canada Nov Retail Sales M/M: No est v -1.2% prior; Retail Sales (ex-auto) M/M: No est v -0.5% prior
  • 08:30 (US) Weekly USDA Net Export Sales
  • 09:00 (BE) Belgium Jan Business Confidence: No est v -3.4 prior
  • 09:45 (US) Jan Preliminary Markit Manufacturing PMI: No est v 52.4 prior; Services PMI: No est v 52.8 prior; Composite PMI: No est v 52.7 prior
  • 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Finland; Fitch on Finland, Greece and Czech Republic); Canadian rating agency DBRS on Netherlands)
  • 13:00 (US) Weekly Baker Hughes Rig Count
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