FXStreet (Delhi) – Research Team at BBH, suggests that the news stream is light today but there are four developments to note. Key Quotes “First, the German labor market report showed a strong finish to 2015. The unemployed queues fell 14k (Bloomberg consensus was for an 8k decline), which matches the revised decline in November. The unemployment rate was unchanged at 6.3%. What is less obvious is that 43 mln workers are the most since unification, and the number of unemployed has fallen below 2 mln for the first time as well. We note that new jobless claims in Spain fell by 55.8k in December, which is also a little more than expected. It is the largest decline since July. Second, following the disappointing German figures yesterday, the eurozone December CPI was unchanged at 0.2%. The core rate was also unchanged at 0.9%. Prior to the German report, the consensus expected a small increase. Third, the UK construction PMI rose to 57.8 from 55.3. The consensus expected a smaller increase (~56). It averaged 57.3 in Q4 after 58.1 in Q3. Sterling fell to its lowest level since last April yesterday just below $1.4665. It is trading below that now, but the intra-day technical suggest a potential retest of the $1.4720 area in the North American session. Fourth, Norway reported a disappointing manufacturing PMI (46.8 vs. 47.5 in November). It is the lowest since August. While the weakness in the krone buys officials some time, a rate cut in the middle of March (the next time that the Norges Bank meets) is likely. Separately, we note that the weakest of the major currencies today is the Swedish krona following reports yesterday that the central bank was preparing to intervene. The North American calendar is light. US auto sales are expected to have reached the 18 mln annual vehicle pace for the fourth consecutive month in December. Last year appears to have been a record year of sales. Canada reports industrial and raw material price indices. The real challenge Canada faces is not prices but growth. Canadian banks’ chief economists provide 2016 economic outlooks today, while Bank of Canada Governor Poloz speaks on Thursday. Although the markets seem to reward dispassionate analysis, there is a strain of superstition that creeps in from time-to-time. The sharp equity market decline on the first day of trading for a new year is seen by some as some sort of omen. It is not. According to a study cited on Bloomberg, since 1904, the direction of the first day predicts the direction of the market for the year about half the time, which is what one would expect if it was random. Moreover, the magnitude of the move adds nothing to its predictive value. EM assets remain under pressure. The year has changed but the negative backdrop for EM has not. Weak global growth, low commodity prices, Fed tightening, and a strong dollar continue to point to further EM stresses ahead. USD/CLP made a new cycle high yesterday to trade at its highest level since 2003. Other EM currencies are likely to follow suit in the coming weeks. USD/BRL is back above 4.0, while USD/TRY is today threatening the 3 area. On the equity side, MSCI EM is down for the second straight day, and has fallen in 5 of the past 7 days. In Brazil, some were hoping that the congressional recess would offer a break from negative political headlines. Unfortunately, that is not the case. Former President Lula has been ordered to testify as a witness on January 25, regarding jailed lobbyist Paes dos Santos. To complicate matters, Lula’s son is involved in the investigation. If Lula is hoping to regain the presidency in 2018, this won’t help matters but for investors, this would be a medium-term positive if it keeps the PT out of power in the next election." For more information, read our latest forex news.