June 1st 2016: China Activity Boosts Confidence

• This morning, the Asia-Pacific region is performing well, helped primarily by inline Chinese manufacturing data and better than expected Australian GDP. The yen pairs are on the back foot, with the USD/ JPY firmly closing Monday’s opening gap lower.

• The dollar index has caught the same bug, forcing the US dollar index lower.

• The Australian dollar is outperforming its peers as GDP came in above expectations for the fourth time in five quarters. The NZD/ USD is trading higher in sympathy.

• The pound is on firmer footing this morning after heavy selling yesterday.

• Coming up today we have Spanish manufacturing PMI at 08.15.
• This is followed by UK manufacturing PMI at 09.30, released alongside net lending to individuals.
• From 15.00, we switch to North America for US ISM Manufacturing PMI.

Trade Idea: 

• The EUR/ JPY has been notable for its under performance, as other yen pairs have risen, the EUR/ JPY has struggled to make any headway of late.

• This hints at underlying weakness and a good way to play this is a LOWER trade predicting that the EUR/ JPY will close below 121.00 in 35 days for a potential return of 169%.

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