Posted 20 hours ago: Greece PSI talks still ongoing; full take up in Italian auction; Swiss KOF declined, Eurozone M3 growth lower; Portuguese yields soar; ECB deposits decline. Key event is Q4 GDP followed by UoM consumer sentiment. We had 7 new Premium trades yesterday evening, with 4 charts on Gold, EUR, US crude and Eurozone spreads. Focus on EURUSD, ESH, CLF and gold.

The USD is weaker in the ongoing session. European equities are in the -0.2% to +0.3% range and the relative strength winners are NZD followed by AUD.

Even though negotiations on Greece PSI continue and a deal has not been reached yet, the EU commissioner Olli Rehn said today that an agreement will be accomplished very soon, either today or during the weekend. ECB's willingness to participate in the swap is still being discussed.

Italy had another solid auction today as it reached a full take up of EUR 11 bln. EUR 8 bln July 2012 BOT sold with average yield 1.969%, considerably lower compared to previous 3.251. However, bid to cover declined to 1.35 from 1.69.

Next week, Italy and Spain are looking to issue a debt worth of EUR 16 bln vs. EUR 10.1 bln this week.

On the data front, Swiss KOF leading indicator declined in January to -0.17 from December's 0.01. This is the 9th monthly decline in a row and the result is the worst since July 2009 and December M3 money supply rose in the Eurozone annually by 1.6%, somewhat lower compared to previous 2%.

With spotlight on Greece PSI talks and US QE3 hints, market participants are overlooking soaring Portuguese yields (5 year yields nearly 20% and 10 year yielded over 15% earlier today) and the chatter about the need for a second bailout. On Wednesday, the head of Portuguese industry confederation told Reuters that additional EUR 30 bln is needed.

ECB deposits declined to EUR 464.8 bln on Thursday.

The ECB president Mario Draghi will kick off the NY session today at 8:15 am when he delivers a speech at the World Economic Forum in Davos.

The key event will come at 8:30 am when Q4 GDP is due and is expected to improve to 3% from previous 1.8%. The GDP price index is seen lower at 2.0% from 2.6%

The last report of this week is final revision of January UoM consumer sentiment that is expected to be revised higher to 74.2 from initial 74.
The latest Premium trades include 4 charts on Gold, EUR, US crude and Eurozone spreads. Focus on EURUSD, gold and US crude. Direct Access to these trades is here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=590 Non subscribers click here: http://ashraflaidi.com/ products/ sub01/

Adam Button - Jan 27 07:49

Posted 22 hours ago: The yen erased all its recent losses on fixing demand and a minor short squeeze. Other majors are packed in a tight range with CAD as a minor laggard. Italy's auctions went well. Markets await The Draghi's speech and the alimportant advanced release of US Q4 GDP. 1st of our two Premium EURUSD longs hit all targets. We had 7 new Premium trades yesterday evening, with 4 charts on Gold, EUR, US crude and Eurozone spreads. Focus on EURUSD, ESH, CLF and gold.

Japanese news and data was relatively benign. CPI fell 0.1% y/y, as expected while December retail sales rose 2.5% compared to 2.0% expected. The BOJ minutes offered nothing particularly noteworthy.

PM Noda said he expects the BOJ to take bold action on the strong yen but those comments did nothing to stop the round of yen buying, which came without a clear reason. According to MNI FX Bullets, stop loss selling in USD/JPY and EUR/JPY was said to exacerbate heavy demand into the Tokyo fix.

Greek debt swap talks are set to resume with the sides said to be close to a deal. We will believe it when we see it.

Italy sold all of its EUR 11 bln target size in 6-month auctions, but with a slightly weaker bid-to-cover ratio at 1.35. The 10-year spread is 10 bps lower than the previous one at at +407bps.There was chatter that the ECB was buying Italian bonds ahead of the auction as part of its SMP program.

Spain Q4 unemployment rose to 22.9% from 21.5%.

Siwss KOF Economic Institute's leading index fell 0.18 points to -0.17 in January,vs an expected -0.1.

The Davos economic forum continues with Draghi slated to speak at 1315 GMT and many other market-movers as well.

EUR/USD and risk trades received a boost from positive US data on durable goods orders early in US trading. Overall orders climbed 3.0% compared to the 2.0% expected and November data was revised higher. Non-defense orders ex-air rose 2.9% versus the 1.0% consensus.
The figures put an upside bias into GDP figures due on Friday.
At the same time, economic news was salted with disappointments in jobless claims and new home sales. EUR/USD reached 1.3184 as European markets closed but drifted lower afterwards, finishing close to 1.3100.

The ECB and Greek creditors continue to debate about what to do with the 40B euros in Greek sovereign debt held by the ECB. Market participants believe the debt swap will go more smoothly, with less chance of a CDS trigger if the central bank accepts some losses.
Reuters reported that the ECB has ruled out taking any losses but that could set off a legal battle with other creditors. The ECB is split on how to proceed and may forgo its coupons in a bid to placate concerns.

Asia-Pacific Preview

Australia returns from holiday but China remains closed.
At 2330 GMT, Japan releases December CPI figures. The national figure is expected at -0.2% y/y after a -0.5% in November. Excluding food and energy, the CPI is expected to fall 1.1% y/y
RBNZ Governor Bollard signalled at the possibility of arate cut, while suggesting the RBNZ has pushed the timing of the next rate hike OCR following disruption to the post-earthquake construction. T

The latest Premium trades include 4 charts on Gold, EUR, US crude and Eurozone spreads. Focus on EURUSD, gold and US crude. Direct Access to these trades is here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=590 Non subscribers click here: http://ashraflaidi.com/ products/ sub01/

Adam Button - Jan 27 05:54

Posted yesterday: Post-Fed US dollar selling subsided in North American trading as the ECB continues to wrangle with how it will deal with Greek bonds on its balance sheet. On the day, the yen was the top performer while EUR and USD lagged. Japanese annual CPI falls for 3rd straight month. 7 new Premium trades were added 4 hours ago, with 4 charts on Gold, EUR, US crude and Eurozone spreads. Focus on EURUSD, ESH, CLF and gold.

EUR/USD and risk trades received a boost from positive US data on durable goods orders early in US trading. Overall orders climbed 3.0% compared to the 2.0% expected and November data was revised higher. Non-defense orders ex-air rose 2.9% versus the 1.0% consensus.
The figures put an upside bias into GDP figures due on Friday.
At the same time, economic news was salted with disappointments in jobless claims and new home sales. EUR/USD reached 1.3184 as European markets closed but drifted lower afterwards, finishing close to 1.3100.

The ECB and Greek creditors continue to debate about what to do with the 40B euros in Greek sovereign debt held by the ECB. Market participants believe the debt swap will go more smoothly, with less chance of a CDS trigger if the central bank accepts some losses.
Reuters reported that the ECB has ruled out taking any losses but that could set off a legal battle with other creditors. The ECB is split on how to proceed and may forgo its coupons in a bid to placate concerns.

Asia-Pacific Preview

Australia returns from holiday but China remains closed.

Japan Dec core CPI -0.1%. Nov CPI showed the 3rd straight annual decline, at -0.2%. Japan 2011 average core CPI -0.3%.

RBNZ Governor Bollard signalled at the possibility of arate cut, while suggesting the RBNZ has pushed the timing of the next rate hike OCR following disruption to the post-earthquake construction. T

The latest Premium trades include 4 charts on Gold, EUR, US crude and Eurozone spreads. Focus on EURUSD, gold and US crude. Direct Access to these trades is here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=590 Non subscribers click here: http://ashraflaidi.com/ products/ sub01/

Adam Button - Jan 26 19:16

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