Heading into the first trading day of 2019, markets continue to remain nervous about various risks, including global economic slowdown, partial US shutdown, US-China trade war fears and the slump in global equities, which plagued the financial markets last year. Yen and gold were the biggest beneficiaries of the reduced risk appetite, while both the EUR and the GBP traded better bid.

The safe-haven yen extended its broad rally as the U.S. dollar dropped to 109.17, its lowest since June last year.

Holiday thinned-trading is likely to extend into Europe. Germany's Markit PMI is dropping at 08:55 GMT, followed closely by the broad EU PMI at 09:00 GMT, and both indicators are expected to hold steady at their previous readings, though political discourse within Europe remains tense as the European Commission juggles overblown government budgets from Italy and France, while also trying to keep a close hand on the runaway Brexit scenario with January set to test investors' confidence with critical events slated for the coming weeks.

UK's latest Markit PMI is dropping at 09:30 GMT though the mid-tier economic indicator is set to be completely overshadowed by a fresh bout of Brexit-focused headlines. January sees Prime Minister Theresa May finally delivering her much-despised Brexit withdrawal agreement for a parliamentary vote after several weeks of strategic delay, and opposition party members are also slated to bring forward a parliamentary no-confidence vote in Mrs. May's government.

The dollar has been dragged by a steep fall in Treasury yields in recent weeks as investors wagered the U.S. Federal Reserve would not raise rates again, even though it is still projecting at least two more hikes. The US docket sees the final manufacturing PMI reading due to be published by Markit at 14:45 GMT.

Oil prices fell in 2019’s first trading day amid surging U.S. output and weak China data.

The pullback in the dollar and the chance of no more U.S. rate hikes has been beneficial for gold. The precious metal reached $1,286 an ounce to be close to a six-month peak. With the dollar losing some of its allure as a safe haven as a result, gold could start relying on its traditional flow to give renewed backing to further upside as equities continue to be caught in the crossfire of slowing global economic growth and the US-China trade war.