Key events to watch today include manufacturing & services PMIs from France, Germany, Eurozone and the UK. As well as a speech from ECB president Lagarde.

With many markets still closed for the holiday, it's been a quiet session in Asia. Japan was open, and the 10-year rates have been holding at approximately 0.39% and away from the 0.5% ceiling, suggesting that the BOJ's tenacious defence of Yield Curve Control is having some success.

Notably, the BOJ's new offer of 1 trillion yen ($7.7 billion) in five-year funds on Monday attracted bids for three times that amount, indicating that this might prove to be a beneficial way to supply additional liquidity to the market.

The USD has increased 1.7% over the last two days and is currently trading around 130 due to increasing spreads versus the yen, while the AUD, a long-time favourite of the carry trade, has increased by more than 3%.

The euro found support at $1.0850 but hasn't been able to go back up to its $1.0927 peak. In a turn of events, bulls are betting that the flash S&P global surveys released on Tuesday would show that the EU economy is now performing better than the US economy.

Early January is expected to witness a little increase in the EU manufacturing PMI to 48.5 from 47.8, and the services PMI to 50.2 from 49.8, which is partly due to dramatically reduced gas costs and the relatively mild winter thus far.

According to JPMorgan, NWE gas storage would be 56% full at the end of winter, which would be higher by over 30% points above the five-year norm and have a negative impact on pricing.

Manufacturing PMI for the United States is anticipated to fall to 46.0 from 46.2 and services to 45.0 from 44.7. Ironically, the weather has been far worse in the United States recently than it has been in Europe, which is not how this narrative was intended to end.

The overnight rise in U.S. stock futures has caused a lull in trading in Asia. Nasdaq futures increased by 2%, driven by semiconductor and other tech companies. Some analysts believe the recent spate of job cuts in the industry signals a shift toward cost-cutting and increased profitability.

After the bell, Microsoft will release its earnings report, with an emphasis on how its cloud and enterprise businesses are performing, though its rumoured $10 billion purchase in OpenAI is expected to garner more media attention.

Texas Instruments, Verizon, and Johnson & Johnson are some additional companies reporting.

Key developments today:

• French Manufacturing and Services PMI (Jan)
• German Manufacturing and Services PMI (Jan)
• Eurozone Manufacturing and Services PMI (Jan)
• UK Manufacturing and Services preliminary PMI
• ECB President Lagarde Speaks

(Investing.com, reuters.com)