European Open: Flash PMIs and US inflation on tap

The US dollar has continued lower overnight following Powell’s dovish comments, with US inflation data having the potential to extend or reverse some of its move.

Charts (4)

Asian Indices:

  • Australia's ASX 200 index rose by 70.2 points (0.96%) and currently trades at 7,354.40
  • Japan's Nikkei 225 index has risen by 257.09 points (0.92%) and currently trades at 28,226.08
  • Hong Kong's Hang Seng index has risen by 289.2 points (1.56%) and currently trades at 18,886.43
  • China's A50 Index has risen by 193.79 points (1.54%) and currently trades at 12,795.85


UK and Europe:

  • UK's FTSE 100 futures are currently up 19.5 points (0.26%), the cash market is currently estimated to open at 7,592.55
  • Euro STOXX 50 futures are currently up 47 points (1.19%), the cash market is currently estimated to open at 4,011.72
  • Germany's DAX futures are currently up 174 points (1.21%), the cash market is currently estimated to open at 14,571.04


US Futures:

  • DJI futures are currently up 7 points (0.02%)
  • S&P 500 futures are currently up 17.25 points (0.14%)
  • Nasdaq 100 futures are currently up 7.5 points (0.18%)




  • The positive momentum Wall Street enjoyed following Powell’s speech was lapped up by Asian equities.
  • China’s stock markets led the way as COVID rules in parts of Beijing were scaled back, further feeding the case for a great reopening.
  • USD/JPY broke to a 3-month low with the effective confirmation that the Fed will slow their pace of tightening.
  • EUR/USD rose to a 3-day high but momentum is already slowing as, despite the Fed’s lower trajectory, the Fed are to continue hiking and rates are likely to remain elevated relative to the ECB’s.
  • Japan’s manufacturing PMI was the latest Asian business sentiment report to contract, following on from China’s ‘official’ PMI reads alongside weak industrial production data from South Korea and Japan yesterday.


US inflation could be another key driver for sentiment today


If you cast your mind back to November 10th, you may remember the strong and bearish reaction to the US dollar when US inflation came in much weaker than expected. It prompted several Fed officials to remind markets that it was just one data point and there was more work to be done to fight inflation, yet the US dollar has continued lower none the less.

The Fed’s preferred inflation gauge – core PCE – is release at 23:30 GMT. As this follows on from an important Powell speech which was deemed as dovish, markets would like to see core PCE more lower to confirm all of the excitement and justify the weaker dollar. Of course, a surprise


GBP/USD daily chart:


Like all major FX pairs, the pound performed well against the weaker US dollar yesterday. Its daily trend remains bullish and has recently bounced along the 10-day EMA, with yesterday’s bullish candle the final part of a 3-day bullish reversal pattern (morning star). A weak inflation print could help this trend continue higher.


FTSE 350 market internals:


FTSE 350: 4180.85 (0.66%) 30 December 2022

  • 229 (65.43%) stocks advanced and 112 (32.00%) declined
  • 10 stocks rose to a new 52-week high, 2 fell to new lows
  • 12.57% of stocks closed above their 200-day average
  • 50.57% of stocks closed above their 50-day average
  • 5.43% of stocks closed above their 20-day average



  • + 6.53% - Elementis PLC (ELM.L)
  • + 6.39% - Dr Martens PLC (DOCS.L)
  • + 5.73% - discoverIE Group plc (DSCV.L)



  • -9.32% - Home REIT PLC (HOMEH.L)
  • -5.47% - Synthomer PLC (SYNTS.L)
  • -5.26% - Abrdn PLC (ABDN.L)



Economic events up next (Times in GMT)





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