The dollar generally holds gains against the other major currencies, as disappointing euro zone inflation data, concerns about the growth of the Chinese economy and the growing tension in the Middle East eroded risk sentiment of the market.

The euro declined significantly against the dollar, updating the yesterday's low. The pressure on the currency has the expectation of publication of inflation data for the euro area. After the publication of this report, the euro continued to fall, as the figures fell short of forecasts. Recall the preliminary data provided by the Statistical Office, Eurostat, showed that consumer prices in the euro zone rose in December by 0.2%, as in the previous month. Experts expect that the prices will increase by 0.4%. Meanwhile, core consumer price index, which does not take into account the extremely volatile components, rose last month by 0.9%, confirming analysts' forecasts. Recall that in November this indicator also increased by 0.9%. The report also stated that the price of food, alcohol and tobacco recorded the largest increase in December - at the level of + 1.2% versus + 1.5% in November. Meanwhile, prices of services increased by 1.1% after increasing by 1.2%. The cost of non-energy goods increased by 0.3%, as in November. Energy prices fell 5.9%, after declining by 7.3%.

Small influenced statistics for Germany. The Federal Labor Agency said that the seasonally adjusted number of unemployed decreased by 14 000, amounting to 2.757 million at the same time. People. Economists had expected the index to fall in 7000, after declining by 14,000 in November (revised from -13,000). Meanwhile, the unemployment rate remained at 6.3 per cent (the lowest value since the time of reference of the statistics, namely from January 1992). The latter value is in line with expectations.

Demand for the safe haven yen-preserved after Monday was published statistics on China, where the index of business activity in the manufacturing sector Caixin fell this month to a level of 48.2 from the previous value of 48.6 in December, with expectations of growth to 48 9.

This minimum value of the index in September, lower than 50, which is the boundary between the deceleration and growth.

Markets are also worried about the growing tension in the Middle East, once in response to the execution of the well-known Shia preacher in Tehran was defeated Saudi embassy.

The pound fell against the dollar, despite the publication of good data on business activity. Experts note that the attitude to risk is now the main driver of movements of the pair, as the US calendar is almost empty.

Earlier today, a report by Markit Economics and CIPS showed that the growth rate of activity in the UK construction industry has accelerated markedly in December after the November reached a seven-month low. According to the index of purchasing managers in the construction sector rose in December to 57.8 points compared to 55.3 points in November. Analysts had expected the index to increase to only 56.0 points. The Markit Economics said that the growth rate of commercial and residential construction rebounded in December after falling to its lowest level since mid-2013 in November. Civil engineering, however, declined, albeit only slightly. It is worth emphasizing the reduction in this sector was recorded for the first time since April 2015. In addition, studies have shown that more than half of the companies expect a rise in business activity during 2016 and only 7 percent predict a decrease.

The International Monetary Fund (IMF) Chief Economic Maurice Obstfeld said in an interview with IMF Survey on Monday that the slowdown in the Chinese economy could again have a negative impact on the global financial markets in 2016.

"Growth below the authorities' official targets could again spook global financial markets," he said.

Obstfeld pointed out that the spillovers from the slowdown in Chinese economy have been larger than expected.

"The global spillovers from China's reduced rate of growth, through its diminished imports and lower demand for commodities, have been much larger than we would have anticipated," the IMF chief economist noted.

The European Central Bank (ECB) purchased €50.3 billion of public and private debt under its quantitative-easing program in December, compared to €62.6 billion in November.

The ECB bought €44.3 billion of government and agency bonds in December, €5.8 billion of covered bonds, and €0.1 billion of asset-backed securities.

The ECB kept its interest rate unchanged at 0.05% on December 04, but lowered its deposit rate to -0.3% from -0.2%. The asset-buying programme will be extended until the end of March 2017. The volume of the monthly purchases remained unchanged.

Spain's labour ministry release its labour market figures on Tuesday The number of registered unemployed people dropped by 55,790 in December, after a 27,071 fall in November.

The decline was mainly driven by a rise in temporary services jobs.

The total number of people registered as unemployed was 4.04 million in 2015, down by 354,203 from the last year.

The People's Bank of China (PBoC) continued to weaken the yuan. The central bank today set the yuan midpoint at 6.5169 prior to the market open against its previous fixing of 6.5032. It was the weakest level since April 2011.

USDJPY 119.00-05 (USD 291m) 120.25 (200m)

EURUSD 1.0800 (EUR 1.09bln) 1.0865-70 (1.1bln) 1.0890 (393m) 1.1000 (196m)

GBPUSD 1.4950 (GBP 119m)

AUDUSD 0.7250-55 (AUD 442m)

EURJPY 130.40 (EUR 350m)

EURGBP 0.7130 (EUR 235m)

Statistics Canada released its industrial product and raw materials price indexes on Tuesday. The Industrial Product Price Index (IPPI) fell 0.2% in November, after a 0.5% decline in October.

The decrease was mainly driven lower prices for primary non-ferrous metal products, which slid 3.5% in November.

11 of the 21 commodity groups increased, 8 declined and 2 was unchanged.

The Raw Materials Price Index (RMPI) dropped 4.0% in November, after a flat reading in October. October's figure was revised down from a 0.4% rise.

The drop was driven by lower prices for crude energy products. Crude energy products fell by 5.7% in November.

2 of the 6 commodity groups rose and 4 decreased.

Economic calendar (GMT0):

(Time/ Region/ Event/ Period/ Previous/ Forecast/ Actual)

08:55 Germany Unemployment Change December -14 Revised From -13 -7 -14

08:55 Germany Unemployment Rate s.a. December 6.3% 6.3% 6.3%

09:30 United Kingdom PMI Construction December 55.3 56 57.8

10:00 Eurozone Harmonized CPI, Y/Y (Preliminary) December 0.2% 0.4% 0.2%

10:00 Eurozone Harmonized CPI ex EFAT, Y/Y (Preliminary) December 0.9% 0.9% 0.9%

The U.S. dollar traded higher against the most major currencies in the absence of any major U.S. economic reports today.

The euro traded lower against the U.S. dollar after the release of the weak inflation data from the Eurozone. Eurostat released its consumer price inflation data for the Eurozone on Tuesday. The preliminary consumer price inflation in the Eurozone remained unchanged at an annual rate of 0.2% in December, missing expectations for a rise to 0.4%.

The preliminary consumer price inflation excluding food, energy, alcohol, and tobacco remained unchanged at an annual rate of 0.9% in December, in line with expectations.

Food, alcohol and tobacco prices were up 1.2% in December, non-energy industrial goods prices gained 0.5%, and services prices climbed 1.1%, while energy prices dropped 5.9%.

The Federal Labour Agency released its unemployment figures for Germany on Tuesday. The number of unemployed people in Germany fell by 14,000 in December, exceeding expectations for a 7,000 decline, after a 14,000 decrease in November. November's figure was revised up from a 13,000 decline.

The unemployment rate remained unchanged at 6.3% in December, in line with expectations.

The British pound traded lower against the U.S. dollar despite the better-than-expected construction PMI data from the U.K. Markit's and the Chartered Institute of Purchasing & Supply's construction purchasing managers' index (PMI) for the U.K. rose to 57.8 in December from 55.3 in November, exceeding expectations for an increase to 56.0.

A reading above 50 indicates expansion in the construction sector.

The index was driven by a rise in commercial construction.

"UK construction companies finished 2015 in a positive fashion, as overall output growth recovered from November's seven-month low. Commercial building was the main engine of growth, with this area of activity expanding at the strongest pace since autumn 2014. There was also a rebound in house building activity in December, but momentum was still much softer than the post-crisis highs achieved during 2014," Senior Economist at Markit, Tim Moore, said.

The Canadian dollar traded lower against the U.S. dollar head of the release of Canadian Industrial Product Price Index.

EUR/USD: the currency pair fell to $1.0745

GBP/USD: the currency pair declined to $1.4658

USD/JPY: the currency pair decreased to Y118.78

The most important news that are expected (GMT0):

13:30 Canada Industrial Product Price Index, m/m November -0.5%

13:30 Canada Industrial Product Price Index, y/y November -0.4%

20:45 U.S. Total Vehicle Sales, mln December 18.19 18.1

22:30 Australia AIG Services Index December 48.2

EUR/USD

Offers 1.0825 1.0840 1.0865 1.0880 1.0900 1.0920 1.0950 1.0965 1.0985 1.1000

Bids 1.0800 1.0780-85 1.0750 1.0730 1.0700 1.0680 1.0665 1.0650

GBP/USD

Offers 1.4725-30 1.4750 1.4765 1.4780 1.4800 1.4820-25 1.4840 1.4865 1.4885 1.4900

Bids 1.4700 1.4680 1.4665 1.4650 1.4630 1.4600 1.4580 1.4565 1.4550

EUR/GBP

Offers 0.7370 0.7385 0.740 0.7420 0.7435 0.7450 0.7475-80 0.7500 0.7530 0.7550

Bids 0.7335 0.7320 0.7300 0.7275-80 0.7250 0.7230 0.7200

EUR/JPY

Offers 129.00 129.20 129.50 129.80 130.00 130.20 130.50 130.80 131.00

Bids 128.75 128.50 128.30 128.00 127.85 127.50 127.30 127.00

USD/JPY

Offers 119.65 119.80 120.00 120.20-25 120.50 120.75 121.00

Bids 119.20 119.00 118.85 118.65 118.50 118.30 118.00 117.80-85 117.50

AUD/USD

Offers 0.7200 0.7220-25 0.7250 0.7280 0.7300 0.7320 0.7350

Bids 0.7180-85 0.7150 0.7120-25 0.7100 0.7085 0.7050

The People's Bank of China today added 130 billion yuan to the financial system. The central bank offered seven-day reverse repos at an interest rate of 2.25%. It was the biggest injection since September 2015.

The Italian statistical office Istat released its preliminary consumer price inflation data for Italy on Tuesday. Preliminary consumer prices in Italy were flat in December, after a 0.4% fall in November.

Prices for services related to recreation including repair and personal care rose 0.3% in December, while prices of durable goods increased 0.4%.

On a yearly basis, consumer prices climbed 0.1% in December, after a 0.1% increase in November.

The increase was mainly driven by higher prices for services related to recreation including repair and personal care. Prices for services related to recreation including repair and personal care rose 0.9% year-on-year in December, after a 0.6% gain in November.

Consumer price inflation excluding unprocessed food and energy prices fell to 0.6% year-on-year in December from 0.7% in November.

Eurostat released its consumer price inflation data for the Eurozone on Tuesday. The preliminary consumer price inflation in the Eurozone remained unchanged at an annual rate of 0.2% in December, missing expectations for a rise to 0.4%.

The preliminary consumer price inflation excluding food, energy, alcohol, and tobacco remained unchanged at an annual rate of 0.9% in December, in line with expectations.

Food, alcohol and tobacco prices were up 1.2% in December, non-energy industrial goods prices gained 0.5%, and services prices climbed 1.1%, while energy prices dropped 5.9%.

The Federal Labour Agency released its unemployment figures for Germany on Tuesday. The number of unemployed people in Germany fell by 14,000 in December, exceeding expectations for a 7,000 decline, after a 14,000 decrease in November. November's figure was revised up from a 13,000 decline.

The unemployment rate remained unchanged at 6.3% in December, in line with expectations.

The number of unemployed people was 1.94 million in November, according to Destatis.

Destatis said that Germany's adjusted unemployment rate remained unchanged at 4.5% in November.

The employment rate climbed to 65.9% in November from 65.4% in October, according to Destatis.

Markit's and the Chartered Institute of Purchasing & Supply's construction purchasing managers' index (PMI) for the U.K. rose to 57.8 in December from 55.3 in November, exceeding expectations for an increase to 56.0.

A reading above 50 indicates expansion in the construction sector.

The index was driven by a rise in commercial construction.

"UK construction companies finished 2015 in a positive fashion, as overall output growth recovered from November's seven-month low. Commercial building was the main engine of growth, with this area of activity expanding at the strongest pace since autumn 2014. There was also a rebound in house building activity in December, but momentum was still much softer than the post-crisis highs achieved during 2014," Senior Economist at Markit, Tim Moore, said.

According to Bloomberg's data, foreign reserves of the 12 biggest emerging economies, excluding China and economies with pegged exchange rates, dropped about 2% to $2.8 trillion in 2015. The actual fall may be smaller as the stronger U.S. dollar led to a lower value of other reserve currencies.

China used more than $400 billion in reserves to stabilise its currency, while most other developing countries such as Russia and Thailand used their foreign reserves to boost their exports.

EUR/USD 1.0800 (EUR 532m) 1.0865 (904m) 1.0890 (393m)

AUD/USD 0.7250-55 (AUD 442m)

EUR/JPY 130.40 (EUR 350m)

Cleveland Fed President Loretta Mester said on Sunday that it was the right decision to start raising interest rates in December.

"I fully supported the FOMC's December action: Based on the economic outlook, I thought it was prudent to take the first step on the path of gradual normalization of interest rates," she said.

Mester pointed out that further interest rate hikes will depend on the incoming economic data.

"The actual path the fed funds rate will follow will depend on the economic outlook as informed by incoming information, but according to the FOMC's current assessment of the outlook, monetary policy is expected to remain accommodative for some time to come, with rates expected to move up only gradually to more normal levels," Cleveland Fed president noted.

"Starting on the gradual normalization path now helps ensure that policy doesn't lag too far behind the economy," she added.

EUR / USD

Resistance levels (open interest**, contracts)

$1.0937 (5496)

$1.0886 (2596)

$1.0860 (1790)

Price at time of writing this review: $1.0811

Support levels (open interest**, contracts):

$1.0788 (2971)

$1.0760 (6107)

$1.0726 (3026)

Comments:

- Overall open interest on the CALL options with the expiration date January, 8 is 55620 contracts, with the maximum number of contracts with strike price $1,1100 (7265);

- Overall open interest on the PUT options with the expiration date January, 8 is 74055 contracts, with the maximum number of contracts with strike price $1,0450 (8017);

- The ratio of PUT/CALL was 1.33 versus 1.33 from the previous trading day according to data from January, 4

GBP/USD

Resistance levels (open interest**, contracts)

$1.5000 (468)

$1.4901 (473)

$1.4803 (419)

Price at time of writing this review: $1.4707

Support levels (open interest**, contracts):

$1.4598 (782)

$1.4499 (207)

$1.4400 (132)

Comments:

- Overall open interest on the CALL options with the expiration date January, 8 is 21225 contracts, with the maximum number of contracts with strike price $1,5100 (2879);

- Overall open interest on the PUT options with the expiration date January, 8 is 19543 contracts, with the maximum number of contracts with strike price $1,5100 (3084);

- The ratio of PUT/CALL was 0.92 versus 0.99 from the previous trading day according to data from January, 4

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

The euro is range-bound ahead of data on consumer prices in the euro zone due at 10:00 GMT. Inflation is likely to show acceleration. The CPI is expected to have risen by 0.3% in December compared to a 0.2% gain in the previous month. Inflation is still well below ECB's 2% target.

The yen stabilized against the U.S. dollar after Chinese stock market rebounded. Yesterday the yen rose by more than 150 points as tensions in the Middle East and weak economic data from China raised demand for this safe-haven currency.

Persistent weakness of China's economy, driven by weaker activity in the manufacturing sector, undermines global commodity demand outlook. This puts pressure on emerging economies, which depend on profits from raw materials. A weaker yuan is also unfavorable for China's trading partners. It suggests that other countries will take steps to lower exchange rates of their currencies too.

EUR/USD: the pair edged down to $1.0827 in Asian trade

USD/JPY: the pair traded within Y119.09-119.69

GBP/USD: the pair rose to $1.4722

The most important news that are expected (GMT0):

(time / country / index / period / previous value / forecast)

08:55 Germany Unemployment Change December -13 -7

08:55 Germany Unemployment Rate s.a. December 6.3% 6.3%

09:30 United Kingdom PMI Construction December 55.3 56

10:00 Eurozone Harmonized CPI, Y/Y (Preliminary) December 0.2% 0.4%

10:00 Eurozone Harmonized CPI ex EFAT, Y/Y (Preliminary) December 0.9% 0.9%

13:30 Canada Industrial Product Price Index, m/m November -0.5%

13:30 Canada Industrial Product Price Index, y/y November -0.4%

20:45 U.S. Total Vehicle Sales, mln December 18.19 18.1

22:30 Australia AIG Services Index December 48.2

(pare/closed(GMT +2)/change, %)

EUR/USD $1,0830 -0,48%

GBP/USD $1,4713 -0,71%

USD/CHF Chf1,002 +0,78%

USD/JPY Y119,43 -0,82%

EUR/JPY Y129,36 -1,29%

GBP/JPY Y175,73 -1,53%

AUD/USD $0,7188 -1,66%

NZD/USD $0,6750 -1,33%

USD/CAD C$1,3952 +0,67%

(time / country / index / period / previous value / forecast)

08:55 Germany Unemployment Change December -13 -6

08:55 Germany Unemployment Rate s.a. December 6.3% 6.3%

09:30 United Kingdom PMI Construction December 55.3

10:00 Eurozone Harmonized CPI, Y/Y (Preliminary) December 0.2% 0.3%

10:00 Eurozone Harmonized CPI ex EFAT, Y/Y (Preliminary) December 0.9%

13:30 Canada Industrial Product Price Index, m/m November -0.5%

13:30 Canada Industrial Product Price Index, y/y November -0.4%

20:45 U.S. Total Vehicle Sales, mln December 18.19 18.1

22:30 Australia AIG Services Index December 48.2