Intraday Market Thoughts

Consumer Confidence & Latest Premium Trades

by Patrik Urban
Dec 27, 2011 12:12

USD is little changed as markets continue to trade in a narrow range. European equities are higher by about 0.5% and the relative strength winner is CHF. US consumer confidence & housing prices are due. Link to latest Premium trades is found below.

The only fundamental news out of Europe this morning was Swiss UBS consumption indicator that fell in November to 0.81 from previous 0.9. The Franc sold on the news but quickly recovered its losses and is currently trading stronger against the EUR and the USD as well. EURCHF trades right above 1.22 support while USDCHF trades near 0.9330.

An interesting development came yesterday when China and Japan unveiled a currency deal that allows their companies to exchange Chinese currency Yuan directly into Japanese Yen without having to use USD in the process. This step will cut costs between two major Asian economies, boost trade and strengthen Yuan's global role. It will also allow Japanese firms to raise a debt that is denominated in Chinese Yuan (CNY). CNY closed today at 6.3223 against the USD, slightly lower compared to Monday's 6.3198.

Pressure on periphery bonds is reappearing again as Italian 10 year yield moved back above 7% and reached 7.14% high. Italian-German spread reached 5.20% high before pulling back to 5.14%.

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With UK and Canada still on holidays, volatility is likely to remain subdued.

The NY session will bring S&P/CS composite index due at 9:00 am ET which is seen lower at -3.2% in October from -3.59% in September followed by December consumer confidence and Richmond FED manufacturing due at 10:00 am.

US Dec Consumer confidence is expected to rise to 58.5 from 56 while manufacturing sector in Richmond is anticipated higher at 6 from previous 0. This could be the first month with positive growth indicating improving conditions since June.


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