We started the new year with some drama from China as trading halted in the world’s second largest economy on Monday after a 7% fall in the Chinese composite index. We also had a raft of manufacturing data released from across the pond and the Yen continued to appreciate after political tensions between Saudi Arabia and Iran remains.
Firstly manufacturing PMI’s were released from the US, UK and Eurozone. The overall tone was disappointing with the US and UK both failing to meet economists’ consensus and the US even posting a figure below 50 for a second consecutive month. Anything above 50 indicates expansion and below contraction. Eurozone manufacturing PMI posted a slightly better than expected figure of 53.2, with bullish readings from Italy, Switzerland and the powerhouse Germany.
The Japanese Yen and Gold have strengthened substantially in a bout of risk aversion after events in Tehran. High yielding commodity currencies have also seen a big impact, with the Kiwi, Aussie and Loonie all weaker against the Greenback. Political tensions between Saudi Arabia and Iran have escalated after diplomatic relations cut in the wake of an attack on the Saudi embassy in Tehran.
The quietest day of the week in terms of data. Inflation from the Eurozone will be watched as lower commodity prices continue their trend. Unemployment readings from Spain and Germany will keep the market interested.