Summary:

• US dollar remains on the back foot following its worst year in more than a decade, Antipodean currencies higher in the aftermath of stronger PMIs
• Chinese Hang Seng (CHNComp on xStation5) soars almost 3% during its first session this year
• Bitcoin (BTCUSD) stumbles a bit at the beginning of 2018, a decline marked on 1 January was the first one since 2015

Financial markets have already entered the new year, however the US dollar which had its worst year in more than a decade, does not seem to be out of the woods. The US currency began 2018 with a drop against all major currencies in the G10 basket except the JPY. Over the course of the recent days we had some data from the Chinese economy which could have helped the Antipodean currencies commence the year better.

Australian AIG manufacturing slid somewhat in December but it maintained well above 50 points. Source: Macrobond, XTB Research

Let’s begin with the Chinese releases of PMIs which showed quite robust performance in the last month of the past year. The manufacturing PMI came in at 51.6 while the November reading saw 51.8, on the other hand the non-manufacturing PMI turned out to be better than expected showing 55 while the market consensus had pointed to 54.7. Those numbers suggest that the Chinese economy remains still fairly solid despite risks related to the real estate. However, it’s worth mentioning that many pundits herald that China could be a main source of a larger financial crisis which could take place even this year.

As far as the Australian economy is concerned we got the CBA manufacturing PMI which came out at 57.1 against the prior release at 56.3. Nevertheless the solid number was overshadowed to some extent by the weaker AIG manufacturing release which showed 56.2 for December meaning a drop from 57.3 registered in November. Either way it’s been the longest run of expansion since 2005 which has propped up the AUD ultimately. Notice that the NZ dollar is gaining along with its counterpart from Australia and a technical view suggests that it may continue its rally.

The NZ dollar has tested its crucial support line which could lead to higher levels on the pair. The stronger resistance might be found at 0.7200 and when bulls break this level, it could pave the way for another rise. Source: xStation5

Looking beyond the FX market it needs to mention the Chinese stock market (CHNComp) which has already gained almost 3% during its first session in the new year. One may spot that developers have been among the best performers boosted by optimism on sales. It’s worth underlining that today’s increase has taken the index close to a 2 1/2-year high.

The CHNComp surged during its first session in the new year once the resistance placed at 12100 points is broken, it could open up a way for further gains. Source: xStation5

Finally let’s write something about Bitcoin which had the worst beginning of a year since 2015 extending its decrease from a record high above $19,000. The virtual currency is trading close to a $13k mark while its major peers have been little changed of late barring Ripple (XRPUSD) which made a mind-blowing rally above $2.4. We will provide a more in-depth analysis on the cryptocurrency block later in the day.