Oil, gold could rise after profit-taking sell-Sharp ...

Crude rises White Superior Copper correct profit taking gold, the risk-weighted assets and have a range of silver to be jumping entries Ebbing New Haven to raw materials in U.S. dollars on the rise in European trading and profit-taking gently lifted risky assets after aggressive sell-out yesterday, the shadow of the headwinds of a disappointing German IFO reading. Prices fell in the last 24 hours as global fears of further economic growth, according to the directions of deepening weakness in China, the euro zone and the United States against the backdrop of the muted hopes for stimulus Fed. Ben Bernanke, and the company decided to expand the QE at a meeting of the FOMC rate decision to suspend committee earlier this week. Moody's decision to downgrade the credit ratings of 15 of the world's largest banks reinforces the dour mood.
For the future, the S & P 500 stock index futures are up, which means more of the same is ahead. Crude oil and copper prices are ready to follow the stock higher, while gold and silver is de facto support a restoration of confidence Haven reduced demand for the dollar. Dallas Fed Manufacturing Survey headlines from the calendar on the hours of the U.S., with expectations calling for a flat reading in June, after the indicator has the biggest drop since September 2011 released last month. New report from May for the House and the Chicago Fed National Activity Index must also cross the wires.
In the meantime, a two-day meeting of finance ministers in Brussels to follow. Coming on the heels of the G20 summit earlier this week, where officials are included in the region face severe pressure from world leaders to step up efforts to the debt crisis, which may be seen sit-down, the occurrence of some preliminary policy ideas. Specific initiatives are likely to wait until the summit of EU leaders next week, but traders continue to pay particular attention to comments to be paid from the sidelines during the first clues.
WTI Crude (NY Close): $ 78.20 / / -3.25 / / -3.99%
Prices broke below the 23.6% Fibonacci b expansionat 81.07, revealing the level of 38.2% to 77.34. Sale is further directed by this edge of the expansion of 50% to 74.40. The 23.6% Fibonacci resistance has been recast as a short term ...

 Daily Chart - Created Using FXCM Marketscope 2.0
Spot Gold (NY Close): $1566.28 // -41.20 // -2.56%
Prices 1600/oz took the figure and 38.2% Fibonacci retracement from 1582.10 to challenge the interim support at 1554.73. A break below this limit makes from 1522.50 to 32.45 range. The limit of 1582.10 has been revised to be as short-term resistance....

Daily Chart - Created Using FXCM Marketscope 2.0
Spot Silver (NY Close): $26.89 // -1.27 // -4.51%
Prices are testing the support at 26.75, on May 16 under, with a break in the low exposure of the Triple higher in 26.05. Short term lines of resistance up to 27.84, the bottom of the formation prior to rotating table flag, which previously acted as a support.

Daily Chart - Created Using FXCM Marketscope 2.0
COMEX E-Mini Copper (NY Close): $3.298 // -0.090 // -2.66%
The prices will test support at 3296, 23.6% Fibonacci expansion. A downside breakout shows in the tri-support 3.250. Short term resistance is at 3.384, the Fibonacci retracement of 23.6%.

Daily Chart - Created Using FXCM Marketscope 2.0

FOREX NEWS - Dollar firms after profit-taking, more gains seen

* Dollar stuck ahead of resistance levels vs yen, euro

* Dollar rally seen on course as U.S. outlook improves

* U.S. inflation, industrial production data awaited

By Jessica Mortimer

LONDON, March 16 (Reuters) - The dollar rose on Friday and was on course to push higher, supported by a brighter U.S. economic outlook, though it stayed below a two-month high against a basket of currencies after traders took profit on recent gains.

Analysts said more evidence of the U.S. economy gaining steam and a further rise in U.S. yields may be required before the dollar extends its rise beyond its recent highs.

The greenback was also stuck below chart resistance levels after failing to break above 85 Japanese yen, while the euro stayed above support at $1.30, where traders reported an options barrier.

"Many still expect euro/dollar to go lower on stronger U.S. data, but few are ready to put on new short positions just yet," said Niels Christensen, currency strategist at Nordea in Copenhagen.

"If we continue to get better U.S. data, with payrolls increasing by more than 200,000, then two-year yields will continue to rise and support the dollar."

Friday will see the release of U.S. inflation and industrial output figures and a University of Michigan sentiment survey and strong readings could help push it higher.

The euro fell 0.2 percent to $1.3060 but stayed above a one-month low of $1.3004 hit on Thursday. Below $1.30, further chart support lies at the Feb. 16 trough of $1.2973.

The dollar rose 0.3 percent to 83.76 yen, not far from an 11-month peak of 84.19 hit on Thursday as the yen suffered in the wake of surprise monetary easing in Japan.

"People are taking profits after huge gains this week made as the last group of hedge funds and other investors went dollar long," said Minori Uchida, a senior analyst at Bank of Tokyo Mitsubishi UFJ in Tokyo.

"It's just a tiny correction in the uptrend which is likely to carry on to at least last year's high (around 85.53 yen), maybe even above 86 yen."

The dollar index, which measures its value against a basket of major currencies, stood at 80.307, up 0.3 percent on the day but below a two-month high of 80.738 hit on Thursday.

Growing evidence that the recovery in the world's biggest economy is becoming more self-sustaining has fuelled gains in the dollar as market players have scaled back expectations of more stimulus from the Federal Reserve.

U.S. data on Thursday showed claims for new jobless benefits fell to a 4-year low last week as manufacturing activity in the Northeast picked up.

Riskier commodity-linked currencies also came off their recent lows against the dollar, with the Australian dollar at $1.0509, comfortably above a one-month low of $1.0422 plumbed on Thursday.

Support stood at the 200-day moving average at $1.0404, with recent highs just above $1.0550 likely to cap gains for now.

TradeTheNews.com European Market Update: Euro encounters profit-taking following recent rally

 TradeTheNews.com European Market Update: Euro encounters profit-taking following recent rally

***Economic Data***
- (GR) Greece Nov Current Account: -€2.5B v -€1.5B prior
- (RU) Russia Narrow Money Supply Narrow w/e Jan 16th(RUB): T v 7.15T prior
- (EU) ECB: €3.0B borrowed in overnight loan facility v €3.3B prior; €420.9B parked in deposit facility vs. €395.3B prior
- (DE) Germany Dec Producer Prices M/M: -0.4% v +0.1%e; Y/Y: 4.0% v 4.6%e
- (JP) Japan Dec Convenience Store Sales Y/Y: 4.1% v 7.5% prior
- (TH) Thailand Dec Customs Trade Balance: -$2.1B v -$1.4Be; Exports Y/Y: -2.0% v -10.0%e; Imports Y/Y: 19.1% v 5.3%e
- (HU) Hungary Nov Avg Gross Wages Y/Y: 6.0% v 5.4%e
- (TW) Taiwan Dec Industrial Production Y/Y: -8.2% v -6.6%e; Commercial Sales Y/Y: -0.5% v -0.8%e
- (TW) Taiwan Dec Export Orders Y/Y: -0.7% v -0.5%e (First decline in 2 years)
- (HK) Hong Kong Dec CPI Composite Y/Y: 5.7% v 5.6%e
- (NL) Netherlands Nov Consumer Spending Y/Y: -1.2 v -1.7% prior
- (IT) Italy Nov Industrial Orders M/M: +0.1% v -1.6% prior; Y/Y: -0.7% v -4.8% prior
- (IT) Italy Nov Industrial Sales M/M: 0.0% v 0.1% prior; Y/Y: 0.2% v 1.1% prior
- (UK) Dec Retail Sales Ex Auto Fuel M/M: 0.6% v 0.7%e; Y/Y: 1.7% v 1.7%e
- (UK) Dec Retail Sales (with Auto Fuel) M/M:0.6 % v 0.6%e; Y/Y: 2.6% v 2.4%e
- (ES) Spain Nov Trade Balance: -2.7B v -€3.5Be

Fixed Income
- (ZA) South Africa sold total ZAR800M in I/L 2022, 2028 and 2033 Bonds

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Greece pushes to reach agreement in Private Sector Involvement (PSI)with Monday seen as the pivotal day
- Today is the dealine for European bank to submit capital raising plans to EBA
- Jan China manufacturing PMI 48.8 vs 48.7 in Dec (third straight month of contraction)
- Taiwan Export order decline for the first time in 2 years
- China begins week long lunar new year holiday

Equities:
FTSE 100 +0.10% at 5747, DAX -0.30% at 6396, IBEX 35 -0.40% at 8572, FTSE MIB -0.30% at 15,617, SMI -0.40% at 6170

- European shares dipped during the session, presumably on profit taking, after a week of solid gains which culminated in a 5-month high on Thursday. US initial jobless claims fell to a 4-year low while in Europe, Greece is continuing its talks with private investors. Peripheral bond auctions were also successful despite recent sovereign downgrades.
- In individual names, Vodafone [VOD.UK] rose up to 1.8% after Indian Supreme court ruled it had no jurisdiction to tax Vodafone's 2007 acquisition of Hutchison Essar on its territory. Furthermore, it directed the government to return the money with a 4% interest and pay back Vodafone's deposit of INR25B. The tax liability could have been approx. €1.9B. On the other hand, Thyssenkrupp [TKA.GE] issued a profit warning even after refuting speculations that the company would do so during the week. Germany's largest steel maker expects its steel business earnings to be down y/y.

Speakers:
- BoE's Broadbent stated that he did not pre-commit to QE decisions and votes each month on stock of asset purchases. Gilt purchases speed not relevant to his QE decision. He noted that the downside risks had lessen slightly in past 6 months due to actions by central banks and had not seen what was most feared about the EU. He saw household income and growth to improve in H2 and the degree of fiscal tightening to ease. BoE to maintain GDP forecast of flat growth for both Q4, Q1 quarters as near term output looked slightly weaker but Q1 seemed marginally stronger.
- German Fin Min Schaeuble commented in the German press that the economic recovery would be a 'long road' ahead. He stressed that Italy needed to lower its debt as it has been avoiding this since the 1990s. He reiterated the German govt view that Europe could not solve its crisis in 'one go'
- German Coalition MP reiterated the view that Germany should not bring forward ESM payments without participating countries
- BOE Trends in Lending Report noted that bank Long term funding markets were challenging in Q4 and higher funding costs fed into corporate loan pricing. Write-offs were stable in Q4 and arrears were seen stable but might pick up in late 2012
- Spain to maintain its 2012 budget deficit target of 4.4% to GDP (refutes earlier press reports that Budget Minister Montoro stated that the country might miss its 2012 deficit target.
- Portugal PM Coelho commented that it must continue with bailout plan despite market uncertainty
- Poland Central Bank's Chonja-Duch commented that Polish 2011 GDP was seen at 4% or higher and that the recent December output was positive. She noted that the Polish Central Bank should keep interest rates steady through March. The Zloty currency was still in an appreciation trend with EUR/PLN at 4.0 seen reflecting fundamentals (currently at 4.30)
- Austria Debt Agency (AFFA) stated that it would skip the planned auction on Feb 7th due to recent syndicated debt sale of 10-year and 50-year bonds
- France President Sarkozy commented that the Euro Zone still faced danger and stressed that swift action was needed from Greece to stem crisis. All must be done to avoid military conflict in Iran and all must stop buying Iranian oil (appeals to both China and Russia)

Currencies:
- The USD gained over the course of the European morning with some concerns over the looming EBA capital raising plan deadline. Cautious comments from German Finance Minister Schaeuble also weighed against the recent euphoria of the European debt auctions.
- The EUR/USD approached the 1.30 handle in late Asian trading before succumbing to selling pressures with Middle Eastern names cited. EUR/JPY cross was above the 100 level in late Asian and was around the 99.60 as the NY morning approached
- The GBP currency was mixed in the session. There were no surprises in the Retail sales data but the back month was revised lower. The GBP/USD was at 1.5460 ahead of the NY morning, softer by 20 pips from the Tokyo open

Political/ In the Papers:
- Telegraph's Ambrose Evans-Pritchard looked at the recent rise in Portugal's bond yields and credit default swaps (CDS) and attributed some of the rise in yields to forced selling after S&P cut the country's rating to junk. Also, cited concerns that Portugal's fiscal cuts could negatively impact the country's growth, like in Greece.
- Citigroup Europe economist Jurgen Michels, expected Portugal's economy to contract by 5.8% in 2012, which is more pessimistic than the government's forecast. Portugal might not be able to significantly lower its debt levels, unless it implemented a "sizeable" haircut; Expected a haircut of 35% at the end of 2012 or in 2013.
- European officials have ruled out forced haircuts for Portuguese bondholders. Portugal's public debt was about 113% of GDP, while its total debt (including private sector debt) was 360% of GDP. Suggested the high levels of private sector debt in Portugal could make the banking system vulnerable to deleveraging

***Looking Ahead***
- (GR) EU/IMF/ECB Troika chiefs to arrive in Athens
- (MX) G20 Vice Finance Ministers meet in Mexico City
- 7:00 (CA) Canada Dec Consumer Price Index M/M: -0.2%e v +0.1% prior; Y/Y: 2.7%e v 2.9% prior; CPI Index: No est v 120.9 prior
- 7:00 (CA) Canada Dec CPI Core M/M: -0.2%e v +0.1% prior; Y/Y: 2.2%e v 2.1% prior
- 8:00 (PL) Bank of Portugal releases monthly Economic Indicators Report
- 8:00 (PL) Poland Dec Core Inflation M/M: 0.2%e v 0.3% prior; Y/Y: 3.0%e v 3.0% prior
- 8:30 (CA) Canada Nov Wholesale Sales M/M: 0.5%e v 0.9% prior
- 10:00 (US) Dec Existing Home Sales: 4.65Me v 4.42m prior
- 10:00 (MX) Mexico Central Bank Interest Rate Decision: Expected to leave the Overnight Rate unchanged at 4.50%
- 14:00 (AR) Argentina Nov Economic Activity Index M/M: No est v 0.3% prior; Y/Y: 7.5%e v 8.1% prior
- 16:00 (CO) Colombia Nov Trade Balance: $60Me v $103.2M prior
- 18:00 (IT) Italy PM Monti visits Tripoli, Libya

Saturday
- (US) Republican South Carolina Primary

Sunday
- (FI) Finland holds first round of Presidential Elections
- (DE) German Chancellor Merkel to meet IMF Lagarde

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Vs dlr falls FOREX NEWS - euro on profit-taking; Greek talks eyes

LONDON, Jan 20 Reuters)-the euro retreat from to support a two-week high against the dollar on Friday as rally some investors took profits on short covering but can Greece cautious hope shortly before an agreement to avoid a chaotic debt saw standard set.

The single currency was last by 0.3 percent to $1.2920, falling from a peak of $1.2986 in early trading in London, but keep reached well above that last week 17-month low of $1.2624.

So far this week the euro has more than 2 percent, put them on the way to the largest of the increase in October after solid bond strengthened auctions in Spain and France on Thursday risk-taking won.

Analysts said that it was normal profit taking see, after a strong rally and the euro was stay probably short term supported to await the outcome of Greek negotiations as investors.

Greece and his private bondholders resume negotiations bond redemptions will pave Friday among signs that it closer to a deal that are inching fresh the way for an injection of aid from EUR 14.5 billion due in March.

A positive outcome of the talks could strengthen the euro, while restoring investors of bearish bets could see all negative messages.

"This is only profit-taking – rather, we had a linear rally since Monday morning." "On the other hand we could see more medals of championship points, but I think that we are between $1.2860, $1.30, hold", Geoff Kendrick, FX strategist at Nomura said.

"Because the result (the talks) is so binary, rather in market sentiment one way or another go." "We see on well there as more risk at the moment."

Investors betting against the euro stacked after rating agency standard & poor nine euro zone countries, including France and Austria last week downgraded.

Since then, the mood has improved, and some market participants said, that the resolution of these items can be euro another lift in the near future it pushing $1.30 by reported that offers from around, although further gains could be difficult.

"It is not only about Greece." We have a risk to definitely step and we know that there are a lot of euro-dollar shorts on the market. "I expect to $1.30 today but the steam run, if the rally goes much higher,", said Lutz Karpowitz, currency analyst at Commerzbank.

The euro was again against the yen by 0.3 percent to 99.70, that had a rest since is an 11-year low of 97.04 yen on Jan. 16.

Apart from the credit risk market participants see a chaotic Greek still downside risks to the euro in the coming year because of concerns the economy of which progress towards the consolidation of public finances in the region can slip euro zone into recession and limit.

SLOW CHINA MANUFACTURING

The euro and the Australian dollar risk-sensitive took in their purchase a survey result China manufacturer 2012 started in a slow mode.

The HSBC Flash: manufacturing purchasing manager index (PMI), which was the earliest indicator of China's industrial activity, is in January to 48.8 below the 50 area, the expansion from contraction.

The reading was the highest in three months, and finally was a slight improvement over the 48.7 for the December index.

The Australian dollar eased 0.1 percent to $1.0405, floating made in the vicinity one 11-week high of $1.0450 earlier this week.

The dollar slightly higher in comparison to a basket of currencies, 80.382, way from a two-week low of 79.99 earlier in the session taken.

The dollar rose against the yen 0.1 percent 77.18 yen, hovering close to the top of the range 76.30 yen 77.342 Yen seen so far in January.

FOREX NEWS - Euro falls vs dlr on profit-taking; Greek talks eyed

* Euro retreats from two-week high as investors book profit

* On track for biggest weekly rise in three-months, $1.30 eyed

* Cautious optimism on Greek debt swap talks

By Nia Williams

LONDON, Jan 20 (Reuters) - The euro retreated from a two-week high against the dollar on Friday as some investors took profits on a short-covering rally but cautious hopes Greece may be nearing a deal to avoid a chaotic debt default looked set to offer support.

The single currency was last down 0.3 percent at $1.2920, falling back from a peak of $1.2986 hit in early London trade, but holding well above the 17-month low of $1.2624 reached last week.

So far this week the euro has gained more than 2 percent, putting it on track for the biggest weekly rise since October after solid bond auctions in Spain and France on Thursday boosted risk appetite.

Analysts said it was normal to see profit-taking after such a strong rally and the euro was likely to stay supported in the short-term as investors await the outcome of the Greek talks.

Greece and its private bondholders resume negotiations on Friday amid signs they are inching closer to a deal that will pave the way for a fresh injection of aid before 14.5 billion euros of bond redemptions fall due in March.

A positive outcome to the talks could boost the euro, while any negative news could see investors re-establish bearish bets.

"This is just profit-taking - we pretty much had a straight-line rally since Monday morning. We could see another 40-odd points on the downside but I think we will hold between $1.2860 to $1.30," said Geoff Kendrick, FX strategist at Nomura.

"Because the outcome (of the talks) is so binary, market sentiment tends to go one way or the other. We certainly see it as more risk-on at the moment."

Investors stacked up bets against the euro after ratings agency Standard & Poor's downgraded nine euro zone countries including France and Austria last week.

Since then sentiment has improved, and some market players said the unwinding of those positions may give the euro a further lift in the near-term, pushing it through reported offers around $1.30, although further gains could be difficult.

"This is not only about Greece. We have definitely had a risk-on move and we know there are a lot of euro/dollar shorts in the market. I expect we will breach $1.30 today but run out of steam if the rally goes much higher," said Lutz Karpowitz, currency analyst at Commerzbank.

Against the yen, the euro was down 0.3 percent at 99.70, having rebounded since hitting an 11-year low of 97.04 yen on Jan. 16.

Aside from the risk of a messy Greek default, market players still see downside risks to the euro in coming months, due to concerns that the euro zone economy may slip into recession and limit progress toward fiscal consolidation in the region.

SLUGGISH CHINA MANUFACTURING

The euro and the risk-sensitive Australian dollar took in their stride a survey showing China's manufacturers started 2012 in a sluggish mode.

The HSBC flash manufacturing purchasing managers index (PMI), the earliest indicator of China's industrial activity, stood at 48.8 in January, below the 50 level that demarcates expansion from contraction.

The reading was the highest in three months, however, and was a slight improvement on the 48.7 final figure for the December index.

The Australian dollar eased 0.1 percent to $1.0405, hovering near an 11-week high of $1.0450 hit earlier this week.

The dollar edged higher versus a basket of currencies to 80.382, moving away from a two-week low of 79.99 hit earlier in the session.

Against the yen, the dollar rose 0.1 percent at 77.18 yen , hovering near the top end of the 76.30 yen to 77.342 yen range seen so far in January.

© Thomson Reuters 2011. All rights reserved.

Forex News
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TradeTheNews.com European Market Update: Euro encounters profit-taking following recent rally

Back to The Headlines
Share This Story: Friday, January 20, 2012 5:47:16 AM TradeTheNews.com European Market Update: Euro encounters profit-taking following recent rally***Economic Data***
- (GR) Greece Nov Current Account: -€2.5B v -€1.5B prior
- (RU) Russia Narrow Money Supply Narrow w/e Jan 16th(RUB): T v 7.15T prior
- (EU) ECB: €3.0B borrowed in overnight loan facility v €3.3B prior; €420.9B parked in deposit facility vs. €395.3B prior
- (DE) Germany Dec Producer Prices M/M: -0.4% v +0.1%e; Y/Y: 4.0% v 4.6%e
- (JP) Japan Dec Convenience Store Sales Y/Y: 4.1% v 7.5% prior
- (TH) Thailand Dec Customs Trade Balance: -$2.1B v -$1.4Be; Exports Y/Y: -2.0% v -10.0%e; Imports Y/Y: 19.1% v 5.3%e
- (HU) Hungary Nov Avg Gross Wages Y/Y: 6.0% v 5.4%e
- (TW) Taiwan Dec Industrial Production Y/Y: -8.2% v -6.6%e; Commercial Sales Y/Y: -0.5% v -0.8%e
- (TW) Taiwan Dec Export Orders Y/Y: -0.7% v -0.5%e (First decline in 2 years)
- (HK) Hong Kong Dec CPI Composite Y/Y: 5.7% v 5.6%e
- (NL) Netherlands Nov Consumer Spending Y/Y: -1.2 v -1.7% prior
- (IT) Italy Nov Industrial Orders M/M: +0.1% v -1.6% prior; Y/Y: -0.7% v -4.8% prior
- (IT) Italy Nov Industrial Sales M/M: 0.0% v 0.1% prior; Y/Y: 0.2% v 1.1% prior
- (UK) Dec Retail Sales Ex Auto Fuel M/M: 0.6% v 0.7%e; Y/Y: 1.7% v 1.7%e
- (UK) Dec Retail Sales (with Auto Fuel) M/M:0.6 % v 0.6%e; Y/Y: 2.6% v 2.4%e
- (ES) Spain Nov Trade Balance: -2.7B v -€3.5Be
Fixed Income
- (ZA) South Africa sold total ZAR800M in I/L 2022, 2028 and 2033 Bonds
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Greece pushes to reach agreement in Private Sector Involvement (PSI)with Monday seen as the pivotal day
- Today is the dealine for European bank to submit capital raising plans to EBA
- Jan China manufacturing PMI 48.8 vs 48.7 in Dec (third straight month of contraction)
- Taiwan Export order decline for the first time in 2 years
- China begins week long lunar new year holiday
Equities:
FTSE 100 +0.10% at 5747, DAX -0.30% at 6396, IBEX 35 -0.40% at 8572, FTSE MIB -0.30% at 15,617, SMI -0.40% at 6170
- European shares dipped during the session, presumably on profit taking, after a week of solid gains which culminated in a 5-month high on Thursday. US initial jobless claims fell to a 4-year low while in Europe, Greece is continuing its talks with private investors. Peripheral bond auctions were also successful despite recent sovereign downgrades.
- In individual names, Vodafone [VOD.UK] rose up to 1.8% after Indian Supreme court ruled it had no jurisdiction to tax Vodafone's 2007 acquisition of Hutchison Essar on its territory. Furthermore, it directed the government to return the money with a 4% interest and pay back Vodafone's deposit of INR25B. The tax liability could have been approx. €1.9B. On the other hand, Thyssenkrupp [TKA.GE] issued a profit warning even after refuting speculations that the company would do so during the week. Germany's largest steel maker expects its steel business earnings to be down y/y.
Speakers:
- BoE's Broadbent stated that he did not pre-commit to QE decisions and votes each month on stock of asset purchases. Gilt purchases speed not relevant to his QE decision. He noted that the downside risks had lessen slightly in past 6 months due to actions by central banks and had not seen what was most feared about the EU. He saw household income and growth to improve in H2 and the degree of fiscal tightening to ease. BoE to maintain GDP forecast of flat growth for both Q4, Q1 quarters as near term output looked slightly weaker but Q1 seemed marginally stronger.
- German Fin Min Schaeuble commented in the German press that the economic recovery would be a 'long road' ahead. He stressed that Italy needed to lower its debt as it has been avoiding this since the 1990s. He reiterated the German govt view that Europe could not solve its crisis in 'one go'
- German Coalition MP reiterated the view that Germany should not bring forward ESM payments without participating countries
- BOE Trends in Lending Report noted that bank Long term funding markets were challenging in Q4 and higher funding costs fed into corporate loan pricing. Write-offs were stable in Q4 and arrears were seen stable but might pick up in late 2012
- Spain to maintain its 2012 budget deficit target of 4.4% to GDP (refutes earlier press reports that Budget Minister Montoro stated that the country might miss its 2012 deficit target.
- Portugal PM Coelho commented that it must continue with bailout plan despite market uncertainty
- Poland Central Bank's Chonja-Duch commented that Polish 2011 GDP was seen at 4% or higher and that the recent December output was positive. She noted that the Polish Central Bank should keep interest rates steady through March. The Zloty currency was still in an appreciation trend with EUR/PLN at 4.0 seen reflecting fundamentals (currently at 4.30)
- Austria Debt Agency (AFFA) stated that it would skip the planned auction on Feb 7th due to recent syndicated debt sale of 10-year and 50-year bonds
- France President Sarkozy commented that the Euro Zone still faced danger and stressed that swift action was needed from Greece to stem crisis. All must be done to avoid military conflict in Iran and all must stop buying Iranian oil (appeals to both China and Russia)
Currencies:
- The USD gained over the course of the European morning with some concerns over the looming EBA capital raising plan deadline. Cautious comments from German Finance Minister Schaeuble also weighed against the recent euphoria of the European debt auctions.
- The EUR/USD approached the 1.30 handle in late Asian trading before succumbing to selling pressures with Middle Eastern names cited. EUR/JPY cross was above the 100 level in late Asian and was around the 99.60 as the NY morning approached
- The GBP currency was mixed in the session. There were no surprises in the Retail sales data but the back month was revised lower. The GBP/USD was at 1.5460 ahead of the NY morning, softer by 20 pips from the Tokyo open
Political/ In the Papers:
- Telegraph's Ambrose Evans-Pritchard looked at the recent rise in Portugal's bond yields and credit default swaps (CDS) and attributed some of the rise in yields to forced selling after S&P cut the country's rating to junk. Also, cited concerns that Portugal's fiscal cuts could negatively impact the country's growth, like in Greece.
- Citigroup Europe economist Jurgen Michels, expected Portugal's economy to contract by 5.8% in 2012, which is more pessimistic than the government's forecast. Portugal might not be able to significantly lower its debt levels, unless it implemented a "sizeable" haircut; Expected a haircut of 35% at the end of 2012 or in 2013.
- European officials have ruled out forced haircuts for Portuguese bondholders. Portugal's public debt was about 113% of GDP, while its total debt (including private sector debt) was 360% of GDP. Suggested the high levels of private sector debt in Portugal could make the banking system vulnerable to deleveraging
***Looking Ahead***
- (GR) EU/IMF/ECB Troika chiefs to arrive in Athens
- (MX) G20 Vice Finance Ministers meet in Mexico City
- 7:00 (CA) Canada Dec Consumer Price Index M/M: -0.2%e v +0.1% prior; Y/Y: 2.7%e v 2.9% prior; CPI Index: No est v 120.9 prior
- 7:00 (CA) Canada Dec CPI Core M/M: -0.2%e v +0.1% prior; Y/Y: 2.2%e v 2.1% prior
- 8:00 (PL) Bank of Portugal releases monthly Economic Indicators Report
- 8:00 (PL) Poland Dec Core Inflation M/M: 0.2%e v 0.3% prior; Y/Y: 3.0%e v 3.0% prior
- 8:30 (CA) Canada Nov Wholesale Sales M/M: 0.5%e v 0.9% prior
- 10:00 (US) Dec Existing Home Sales: 4.65Me v 4.42m prior
- 10:00 (MX) Mexico Central Bank Interest Rate Decision: Expected to leave the Overnight Rate unchanged at 4.50%
- 14:00 (AR) Argentina Nov Economic Activity Index M/M: No est v 0.3% prior; Y/Y: 7.5%e v 8.1% prior
- 16:00 (CO) Colombia Nov Trade Balance: $60Me v $103.2M prior
- 18:00 (IT) Italy PM Monti visits Tripoli, Libya
Saturday
- (US) Republican South Carolina Primary
Sunday
- (FI) Finland holds first round of Presidential Elections
- (DE) German Chancellor Merkel to meet IMF Lagarde Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.