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2013 marked one of the hardest ever to trade EUR/USD, with macro funds having no idea where the pair was going. One of the key elements that has kept the single currency buoyed has been the sizeable current account surplus, and it has been apparent for some time that European banks have been selling non-core assets and repatriating assets back to Europe, thus creating EUR inflows and causing EUR strength in anticipation of the ECB’s asset quality review (AQR). It’s worth pointing out that traditionally January is one of the worst months to be long on EUR/USD and there are signs the momentum might be fading, with the downtrend drawn from the 2008 high holding at 1.3833.
Over the last few years, being long on the S&P in January has been a fairly good trade, however it seems traders and money managers do most of their buying on the first day of the year. Over the last five years the US benchmark has gained an average of 2% on the first business day of New Year. Will we see the same price action today?
While most other markets were closed for the New Year holiday, Chinese stocks were open and recorded a gain on the day, despite a slight miss on the official manufacturing PMI data that was released. At 12:45 AEDT today we get the HSBC PMI manufacturing report. This report surveys the smaller manufacturers in China and could get focus from traders today; with AUD likely to also take it queues from this data point.
Speculation in The Australian newspaper that Shell may offload its 24.1% stake in the coming weeks has resurfaced again. By all accounts, demand for Shells stake should be high and while many have been expecting Shell to sell its stake for some time the removal of the overhang could be positive for the share price. With 50-, 100- and 200-day moving averages headed sideways, traders should continue to trade an A$37.00 to A$39.00 range in the short-term.