OVERALL RISK: bullish
US EQUITIY FUTURES: Slightly bearish
CURRENCY WINNER/LOSER: +NZD, -GBP
1010 GMT French
Presidential election frontrunner Hollande is talking tough on banks,
pledging if elected to separate investment activities from other
activities as well as ban them from tax havens. He has also proposed a
new Franco-German treaty to increase cooperation. Geopolitics has
dominated headlines this morning with the German Foreign Minister
pledging to increase EU pressure aimed at stopping funding that the EU
suspects is being used to develop nukes.
0853 GMT EURUSD
has rallied strongly above 1.2900 and is now at 1.2930. Sources are
saying Middle Eastern buyers are behind the move. German Foreigm
Minister Westerwelle is now speaking in Brussels, says Iran sanctions
are aimed at cutting funds for nukes, adding that EU will agree to
sanctions. NYMEX is volitile on Iran developments. Bonds are seeing some
strength ahead of the EU summit with EMU peripheral 10-years looking
better.
0745 GMT Greek PSI
update: reports are saying bondholders have made their final and
"maximum" debt swap offer to the EU and IMF. Italy's Monti and ECB's
Draghi have voiced a desire to see the ESM expanded by 100% to EUR 1tln.
SNB quashes EURCHF speculation, saying will defend 1.2000 peg with
"utmost determination." French BusCon indicator for January comes in at
91, versus expected 95 and previous 94.
0645 GMT In
European trade this morning, commodity currencies continue to be
strong. The Asian session saw some comments saying that Italy wants an
increased EU bailout fund, as well as a vote by Croatia to join the EU.
Keep heads up for German and French auction results later today, as well
as the EU FinMin meeting.
FOREX: Euro Debt Crisis in Focus as Finance Ministers Meeting Looms
The Eurozone debt crisis remains in focus as traders look to a meeting of the currency bloc’s finance ministers today for details of the much-anticipated “fiscal compact” aimed at introducing structural reforms to restore confidence and rein in borrowing costs ahead of a larger EU leaders’ summit next week. Also on the agenda is a final agreement on the degree of private-sector involvement (so-called “PSI”) in the Greek bailout. The agreement on a 50 percent haircut for the country’s creditors hashed out in October now looks like it may unravel.
The newswires point to a loose agreement whereby
private creditors would accept losses of as much as 65-70 percent on
their holdings of Greek debt but the particulars of a bond swap
exchanging outstanding paper for new longer-dated maturities to help the
country finance its immediate obligations remain elusive. If the talks
fail, Greece may yet face a disorderly default that threatens to throw
credit markets at large into turmoil. Indeed, a PSI agreement is vital
to releasing a tranche of funding from the second EU/IMF bailout for the
beleaguered country needed to cover €14.5 billion in debt maturing in
March. The main point of contention is reportedly the coupon rate
assigned to the new bonds.
Against this backdrop, France and Germany
will tap the markets to sell €7.3 billion and €3 billion in
shorter-term debt, respectively. Paris will be selling 91-, 168- and
350-day bills while Berlin will offer 12-month paper. As usual, traders
will keep an eye on prevailing yield and bid-to-cover readings following
the auctions for a reading on the degree of solvency stress in the
markets. On the data front, a quiet European docket is likely to put the
spotlight on the Richmond Fed Manufacturing Index reading due out in the US, where forecasts call for the highest print in 8 months.
Asia Session: What Happened
|
GMT
|
CCY
|
EVENT
|
ACT
|
EXP
|
PREV
|
|
0:30
|
AUD
|
Producer Price Index (QoQ) (4Q)
|
0.3%
|
0.4%
|
0.6%
|
|
0:30
|
AUD
|
Producer Price Index (YoY) (4Q)
|
2.9%
|
3.0%
|
2.7%
|
|
5:00
|
JPY
|
Supermarket Sales (YoY) (DEC)
|
-0.6%
|
-
|
-2.3%
|
Euro Session: What to Expect
|
GMT
|
CCY
|
EVENT
|
EXP
|
PREV
|
IMPACT
|
|
7:45
|
EUR
|
French Own-Company Production Outlook (JAN)
|
-
|
-2
|
Low
|
|
7:45
|
EUR
|
French Production Outlook Indicator (JAN)
|
-36
|
-37
|
Low
|
|
7:45
|
EUR
|
French Business Confidence Indicator (JAN)
|
95
|
94
|
Low
|
|
8:00
|
CHF
|
Money Supply M3 (YoY) (DEC)
|
-
|
7.2%
|
Low
|
|
8:00
|
CHF
|
Real Estate Index Family Homes (4Q)
|
-
|
398.6
|
Low
|
|
10:15
|
EUR
|
Germany to Sell €3B in 12mo Bonds
|
-
|
-
|
Medium
|
|
14:00
|
EUR
|
France to Sell €7.3B in 91-350 day Bills
|
Medium
|
||
|
15:00
|
EUR
|
Euro Zone Consumer Confidence (JAN A)
|
-21.4
|
-21.1
|
Medium
|
|
16:00
|
EUR
|
Euro Zone Finance Ministers Meet in Brussels
|
-
|
-
|
High
|
Critical Levels
|
CCY
|
SUPPORT
|
RESISTANCE
|
|
EURUSD
|
1.2883
|
1.2982
|
|
GBPUSD
|
1.5492
|
1.5620
|
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