Markets opened the trading year looking for direction, ahead of the US Presidential inauguration. The Trump policies will include market friendly de-regulation and tax cuts, but trade policies hold some reservations. Tariffs for Europe and Asian remain a probability, but the extent and duration, remain in question. Even the US neighbours fear tariffs, as both Mexico and Canada, have been threatened. There was little on the economic data front to cause certainty of direction, but the US Dollar remains strong, with the EUR crashing to 1.0240. The EUR looks set to crumble below parity early in the year, while the GBP stumbled to 1.2360. European PMI data confirmed the manufacturing remains deep in contraction mode.The strong reserve continued to pressurise commodity currencies, with the AUD slipping below 0.6200, while the NZD traded around 0.5600. Chinese Manufacturing PMI was weaker than expected and provided little solace for the commodity currencies. The holiday trade continues until next week, when we can expect an uptick in economic data releases, to increase and drive a more certain market direction.
