Intraday Market Thoughts

UK Inflation Steady; Current Account Deficit Next

by Ashraf Laidi
Dec 18, 2012 12:31

Balanced RBA minutes; UK consumer inflation steady; Riksbank cuts; Spanish auction. The US session will bring US current account balance and later the same data from NZ. Watch the action in GOLD vs EUR as it further drops below its 55-WMA, showing a pattern not seen since 2008.

The optimism from the perceived progress on the fiscal cliff negotiations helped to push risk trades slightly higher at the beginning of the London session. However, most of these gains were lost later in the session.

The Aussie was steady after balanced RBA minutes showed no signs of additional easing in near term. The members noted growth stabilization in China and commodity prices and also the observed effects of lower lending rates. AUDUSD trades slightly lower around 1.0530.

The consumer inflation in the UK was steady and in line with expectations in November at 2.7%. The core figure remained at 2.6%. The headline number declined from 5.2% in 09/2011 to 2.2% in September 2012. GBPUSD pushed higher but gave up all gains and trades around 1.6205.

In other news, Sweden's Riksbank cut the key repo rate by 25 bp to 1.0% noting downside pressures from abroad. It also lowered GDP projections for 2013 and 2014.

Spain sold 3 and 6 month bill totaling EUR 3.523 bln vs. EUR 2.5-3.5 bln target. The average yields declined but cover was mixed.

The US data calendar is limited to Q3 current account deficit at 8:30 am ET that is expected to narrow to USD 105 bln from previous -117 bln. By the end of the session at 4:45 pm ET the statistics office of New Zealand will announce Q3 current account deficit that is seen wider at NZD 4.28 bln from previous NZD 1.8 bln deficit.

Act Exp Prev GMT
Current Account (Q3)
$-107.51B $-103.40B $-118.11B Dec 18 13:30
MPC Meeting Minutes
0-0-9 0-0-9 Dec 19 9:30

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