EUR/JPY: Bulls take up the baton in firmer risk tones

• EUR/JPY rallies 0.17%in the open as risk tones firm following end of week and weekend headlines.  
• Hong Kong elections underpin trade-deal sentiment and Brexit hops gain traction.  

EUR/JPY is currently trading at 119.90, higher by 0.17% having travelled between 119.65 and 119.92 on firmer risk tones where financial markets were  buoyed going into the weekend with US PMI’s contrasting with the Eurozone flash Nov PMIs disappointment.

Global PMIs mixed to improving, raising hopes of a turnaround

Manufacturing was encouraging but still weak at 46.6 (est. 46.4, prior 45.9), and services fell to 51.5 (est. 52.4, prior 52.2), to underscore the vulnerability of the region –  The preliminary read of the Markit euro area and German PMI figures depicted an economy running below trend. Meanwhile, US Manufacturing PMI rose to 52.2 in November, a seven-month high, from 51.3 in October which was  the third successive rise in the index indicating a slowdown in the US manufacturing sector may be bottoming out.  Subsequently, US equity markets were up with the S&P 500 and DJIA up 0.2% and 0.4% respectively at the close. The DAX was higher by  0.2% and the FTSE 100 added  1.2%.

EUR/JPY catching up with risk appetite  

Asia open: Recap of latest developments as risk-on tones emerge

However, there was a lag in the cross, with EUR/JPY unable to rally and was, in fact, losing around 0.5% into the close.  EUR/JPY has finally corrected amid the weekend headlines which compliment President Trump’s statements and Chinese rhetoric  that a phase-one trade deal was on the cards. Weekend headlines, in Bloomberg news, notes a trade deal compromise with the Chinese raising penalties for IP theft. We also had news of a  landslide victory  for the  Pro-democracy candidates in Hong Kong – Brexit headlines have also been positive for risk sentiment with the Tory party in the lead in the polls. Risk appetite has reacted in kind and hence EUR/JPY has picked up the bid.  

EUR/JPY levels