Data/Event Risks
- USD: Regional ISMs are on the menu today, as well as personal income and spending. Next week is more critical, with a host of labour market data and the national ISM, as well as more flavour on how the fiscal cliff negotiations are proceeding.
- EUR: Only second tier news today, the most interesting being the EC unemployment rate. Peripheral bond yields declined further yesterday, despite continuing concerns re both Greece and Spain.
Idea of the Day
The mood music in the markets right now remains quite fickle, which renders trading dangerous on the one hand but breeds some interesting opportunities on the other. Last-minute month-end flows could add to the volatility today. The dollar has back-tracked slightly over the second half of this week – if the fiscal cliff negotiations appear to be headed for the rocks, perhaps the greenback may re-discover its perk.
Latest FX News
- EUR: Through the day-to-day noise, the euro has done reasonably well over the past two weeks. Still, to really attract attention, this current push higher would need to break through the September/October high and get above 1.32. Some worries that the Greek debt buy-back proposal is already unravelling.
- JPY: Weaker overnight, some talk that it was related to Softbank’s purchase of Sprint. Japan’s government announced a JPY 880bn stimulus package, as mooted a few days ago. .
- AUD: Since early October, has respected a gently-sloping uptrend, although with an occasional wobble. These days trades more like a safe-haven currency than a high-beta one – yesterday it fell despite the fact that risk assets strengthened.
- GBP: Had a healthy bid despite total lack of new news. Indeed, has looked comfortable for two weeks now, without really breaking any new ground. Needs to trade above 1.61 to really test the mettle of the bears.
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