Morning Update – 04/01/16 – by Arjun Lakhanpal

January 4, 2016 by savi-admin

Morning all and a very Happy New Year to you all..Its good to be back…. A very poor close on Wall St Friday as the last batch of economic data for the year was generally disappointing. Of particular note, the December Chicago PMI plunged 5.8pts to a below market 42.9 (vs. 50.0 expected) which was the lowest reading since July 2009. The ISM Milwaukee also printed sub-50 as expected at 48.5, although this was up over 3pts from the November reading while on the employment front there was a bigger than expected rise in the latest initial jobless claims print to 287k, up 20k from the previous print. And things have gone from bad to worse at the start of the week in Asia with China down 7% and closed as the new circuit breaker rules close the market if a 7% fall seen. This was based on very poor manufacturing data from China and rising geopolitical risks across the Middle East. Saudi Arabia cut diplomatic ties with Iran after the Saudi Embassy in Iran was set ablaze after the Saudi’s had executed 47 people including a Shi’ite cleric. USDJPY and the commodity bloc all fell steeply with AUD trading as low as .7200 and USDJPY down at 119.19. Oil is surprising in as far as that the rally has been rather muted so far. Gold is higher and there is demand for the safe harbour of US bonds with yields lower. Looking at the week ahead now and kicking off the New Year in Europe this morning we’ve got the final December manufacturing PMI numbers for the Euro area, Germany and France, as well as data for Italy, Spain and the UK. Net consumer credit, money supply and mortgage approvals data for the latter is also due, while in Germany we’ll also get the preliminary December CPI reading. Over in the US this afternoon the focus will be on the ISM manufacturing print for December (small pickup expected) along with construction spending, ISM prices paid and the final manufacturing PMI. Good luck