China s GDP numbers on the limelight Euro remains under pressure against other major currencies

All eyes will be on China’s fourth quarter GDP print today when markets resume trading in Asia.

US markets were closed overnight for the Martin Luther King holiday. Stocks rallied in Europe despite the European Financial Stability Fund (EFSF) being downgraded by S&P – a largely expected event following Friday’s downgrade to France.

The Stoxx Europe 300 Index managed to post a 0.8% rise overnight while S&P500 index futures in the US were pointing to a 0.2% rise when markets resume trading tonight Asian time. French bonds rallied after borrowing costs fell at the first bond auction since Friday’s downgrade – a sign that the market is now looking forward.

The European central bank also acquired more Italian and Spanish debt – an indication that it is not willing to see a complete fallout of contagion across the region.

Still, the Euro remains vulnerable against the US dollar, last trading at around 1.2665. The US dollar against the Japanese Yen remains in a tight trading range between 76.50-77.00, last at 76.77.

China’s GDP number is the key event. Overnight, copper rallied US$4/lb in anticipation of a strong fourth quarter GDP print for the world’s second largest economy. Copper is now trading comfortably above the US$3.30-US$3.60/lb range where consolidation was expected.

The breakout combined with a short rally in the Australian dollar, last trading at around 1.0310 against the US dollar, means anything nothing short of an 8.7% year-on-year GDP print will disappoint the market.

Market estimates are for the quarter-on-quarter growth rate to have come down from 2.30% previously to 2% flat in the fourth quarter.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.