Summary:
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Donald Trump hails progress in trade talks on Twitter
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Chinese manufacturing PMI drops into contraction area
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Monday’s trading expected to be extremely thin due to New Year’s Eve holiday in many countries
Trading during today’s Asian session was very light as the Japanese, Chinese and Korean traders took a day off for holiday. One can also expect volumes during the European to be depressed as most of stock exchanges from the Old Continent will remain shut today including German and Italian bourses. The US session will not be shortened and will be held during the normal trading hours.
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Donald Trump announced progress in trade talks via Twitter on Saturday. Source: Twitter
However, light volumes do not mean that there are no news one could trade on. Just as we are entering the new year Donald Trump has struck an upbeat tone relating China-US trade talks. Namely, the US President announced via Twitter on Saturday that he and the Chinese President Xi held a long conversation and both agreed that progress is being made in trade negotiations. While no details have been presented, such a remark is definitely reason to cheer given how much Trade Wars have disturbed 2018. In turn we are observing the Japanese yen and the Swiss franc weakening against most of their major peers. Nevertheless, one should keep in mind that the tweet could be just a move aimed at boosting moods ahead of 2019, the year that will be crucial for the US-China relationship.
USDJPY tried to break above the support zone in the early morning hours. Nevertheless, the USD began to weaken against the JPY ahead of the European session start and the gain was erased. The pair is trading 2.1% lower YTD. Source: xStation5
Speaking of China it is also worth to mention the PMI indices for December that were released few hours ago. The non-manufacturing gauge unexpectedly managed to move higher from 53.4 pts to 53.8 pts (expected drop to 53.2 pts). However, for China the manufacturing index is much more important. Unfortunately, this gauge failed to perform similar to the services gauge. Markets expected manufacturing index to remain unchanged at 50 pts while the actual data showed a decline to 49.4 pts. It is the first time since early-2016 when this index plunged clearly into contraction area. Trade Wars have surely played their part therefore the outcome of the US-China trade talks will be crucial for whether the Chinese economy will remain on its current track or gradually slow down. Surprisingly, despite downbeat data from the Chinese economy, the Australian dollar is moving higher today.
Other news:
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Still no solution found to end the US government shutdown
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Oil advances on trade talks optimism
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HSCEI (CHNComp) added 1.3% on the final trading session of the year
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German executives expect 2019 to be bumpy on the back of Brexit, trade and political divisions
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