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Swiss in Broad Based Selloff While Silver Steals the Show

Swiss Franc’s selloff is a major focus in the forex markets today, in particular, as it breaks through a key support level against Sterling. The development somewhat drags down the Euro too. The Pound and Dollar are currently the stronger ones while commodity currencies are mixed. Stock markets are stabilizing with rebounds from Asia to US futures. Gold and WTI oil continue sideway trading. But Silver steals the show with strong upside acceleration.

Technically, USD/CHF’s break of 0.8925 resistance is a bullish signal and focus will turn to EUR/USD. Break there will solidify some near term bearishness and extend the correction from 1.2348. EUR/GBP might be giving a hand in pressing the Euro down. But it needs to breaks through 0.8799 projection support to build up downside momentum. At the same, we’ll see if Gold could finally break through 1874.88 resistance to extend the corrective recovery from 1810.07.

In Europe, currently, FTSE is up 1.21%. DAX is up 1.47%. CAC is up 1.40%. Germany 10-year yield is up 0.0055 at -0.509. Earlier in Asia, Nikkei rose 1.55%. Hong Kong HSI rose 2.15%. China Shanghai SSE rose 0.64%. Singapore Strait Times dropped -0.21%. Japan 10-year JGB yield rose 0.0036 to 0.061.

Silver accelerating towards 30 after gap up, next is 33.1

Silver’s rally accelerates after gapping up today and hits as high as 29.22 so far. The strong break of 27.91 resistance confirms resumption of near term rise from 21.88. Next target is 100% projection of 21.88 to 27.91 from 24.12 at 30.15, which is close to 29.84 high.

We’re indeed looking at resumption of whole medium term up trend from 11.67, as consolidation pattern from 29.84 has apparently completed at 21.88. Decisive break of 29.84/30.15 will confirm this bullish case. Stronger upside acceleration should then be seen to 61.8% projection of 11.67 to 29.84 from 21.88 at 33.10.

Eurozone unemployment rate unchanged at 8.3% in Dec, EU unemployment at 7.5%

Eurozone unemployment rate was unchanged at 8.3% in December, matched expectations. EU unemployment rate was also unchanged at 7.5% Eurostat estimated that 16 million men and women in the EU, of whom 1367 million in the Eurozone, were unemployed in December 2020. Compared with November, the number of persons unemployed increased by 67000 in the EU and by 55000 in the Eurozone.

Eurozone PMI manufacturing finalized at 54.8, solid expansion continued

Eurozone PMI Manufacturing was finalized at 54.8 in January, down from December’s 55.2. Markit said the marked gains in new orders and output sustained. But delivery delays intensified, leading to rapid rise in purchase prices. Looking at some member states, the Netherlands hit 28-month high at 58.8. Germany retreated to 4-month low at 47.1. Italy hit 34-month high at 55.1. Australia hit 26-month high at 54.2. France recovered to 6-month-high at 51.6. But Spain contracted at 49.3, 7-month low.

Chris Williamson, Chief Business Economist at IHS Markit said: “Eurozone manufacturing output continued to expand at a solid pace at the start of 2021, though growth has weakened to the lowest since the recovery began as new lockdown measures and supply shortages pose further challenges to producers across the region… While future prospects brightened, with manufacturers’ optimism striking a three-year high in January to sound a reassuring note of confidence at the start of the year, any potential delays to the vaccine roll-outs will add an additional layer of uncertainty to the outlook.”

From Germany, retail sales dropped -9.6% mom in December, versus expectation of -2.3% mom. Swiss retail sales rose 4.7% yoy in December versus expectation of 1.5% yoy. Swiss SVME PMI rose to 59.4 in January, versus expectation of 56.5.

UK PMI manufacturing finalized at 54.1, near-record supply-chain disruptions

UK PMI Manufacturing was finalized at 54.1 in January, down from December’s 3 year-high of 57.5. Markit said supply chains were stretched by Brexit and COVID restrictions. Input cost and selling price inflation both accelerated.

Rob Dobson, Director at IHS Markit: “A mixture of harsher COVID-19 restrictions and Brexit led to near-record supply-chain disruptions, lower exports and increased costs… The hope is that the current constraints will start to ease once COVID-19 restrictions are lifted, vaccines are rolled out and ports, suppliers and manufacturers adapt to the n