We look forward to a positive start to the first European session for 2020

Investors are coming back to the front with renewed strength and new hopes and positive expectations. And why: Trump announces the official signing of Phase 1 between the US and China, and production data from China, albeit with a slight decrease, was considered insignificant, given the fact that PMI remains above the ballast of 50. Also sentiment is supported and another stimulation of China's economy by reducing RRR terms by another 50 points for banks. The change is effective January 6.

On the first trading day of the New Year for Europe, market participants start in a good mood, with European index futures pointing to a stronger opening. The US dollar erased earlier losses, turning the direction up. The yen is inferior, along with the franc, pound and euro against the US currency. Gold continues with the positive series, with January usually a strong month for precious metal. Oil starts trading the day with a decline.

Today in the economic calendar we will expect the production PMI data of Germany, the Eurozone and the USA, and at 21:00 Bulgarian time we will have the first FOMC for the year.

We will expect the European session to remain positive, with the defensive assets lagging behind the risky ones, given the prevailing positive sentiment. We still do not have a strong risk on sentiment, but the progress in Phase 2 trade negotiations and the improvement of the global economy can catalyze stronger demand for risky assets.

Cash flows today will target stocks, indexes and the US dollar, but we will expect the pace to be still slow as all malls, banks and trading floors are activated. And as I mentioned, we also have PMI data today, which is important and will have an impact on asset prices.

Japanese markets will remain closed until the end of the week, reminding that in the Asian session, this increases the likelihood of flash crashes like the one from 02.01.2019 with yen crosses because of the extremely thin liquidity. Something to keep in mind is no guarantee that it will happen again.

Read more:

• Asian markets returned some of the losses but ended in the red
• European markets continue with the losing streak, safe heaven assets are rising
• Protect your portfolio with these defensive stocks
• Forex Today: 2020 kicks off with the dollar recovering amid Chinese RRR cut, trade optimism
• The big banks are forecasting where the S&P500 will end up in late 2020