A day starting with a Flash Crash... ~ Highlights and Schedule for January 3 ~
Yesterday, China’s Caixin Manufacturing PMI fell below 50, signaling recession, with a result of 49.7. Following last year’s manufacturing PMI, weak results prompted a drop in Chinese stock prices. This accelerated the risk-off mood!
With thin trading after the New Year, risk-off yen buying has pushed below 109 yen.
...While writing this article, cross-yen pairs experienced a flash crash!
◎ Today's Focus
1) Flash Crash
After the mark-to-market, amid thin trading, a flash crash occurred centered on cross-yen pairs! The USD/JPY dropped from 109 to below 105 within a few minutes. The causes are said to include downward revisions to Apple’s revenue forecasts and short-term tax tactics, but the truth is unknown.
One thing that can be said is that during such times, orders may not be executed even if you have set a stop. Some brokers did not display quotes; many places were not accepting orders.
How will the market react when the Tokyo market opens today!? Also, attention is on any comments or measures from the Bank of Japan or the Finance Ministry.
USD/JPY 30-tick chart
2) Start of the U.S. Congress
The U.S. Congress begins today. It will be composed of members elected in last year’s midterm elections. In that context, the budget bill is in focus. Since the 22nd last year, some government agencies have been shut down. President Trump stated, “The government shutdown will continue for the time being. It won’t end soon,” and he remains non-negotiable on border wall funding with Mexico.
Attention is on how the Democrats will respond.
3) Economic Indicators
Today’s focus is also PMI. While PMI is a leading indicator, attention is particularly on the ISM Manufacturing Index.
Until this morning, it wasn’t highly anticipated, but after the flash crash, attention has likely increased. In that sense, the ADP Employment Report may also move.
Although liquidity is returning, it remains thinner than usual, so watch the price movements carefully.
◎ Today’s Event Schedule
1/3 (Thursday)
Russia market holiday
Start of U.S. Congress
16:00 TRYTurkey CPI (Consumer Price Index)
17:30 CHF Swiss SVME Purchasing Managers’ Index
18:00 EUR Euro Area Money Supply
18:30 GBPConstruction PMI
22:15 USDADP Employment Report
1/4 (Friday)
00:00 USDISM Manufacturing Index
00:00 MXN Mexico Central Bank Policy Meeting Minutes
