Heading into the North American open, equities in Europe are trading in minor positive territory, underpinned by the release of encouraging macro data from China. China's Q4 growth data came out slightly better than expected, while Japanese stocks surged, after Japanese economic advisor Hamada said JPY weakness to 95 or 100 vs. USD is nothing to worry about. Even though the spot JPY rate is a touch lower and trades in close proximity to an intraday 89.75 option level, the 1-month implieds are bid again as market participants remain bullish on near term direction ahead of the BoJ meeting next week. GBP/USD underperformed its peers, after the ONS said that retail sales growth for the month of December (annual rate) slowed to lowest since December 1998 - except for December 2010, when sales were hit by heavy snow. The ONS said that clothing and food sales did notably badly, but online retailers did well. Looking at other asset classes, the EONIA curve steepened again this morning, with the Euribor strip down between 3-7ticks, underpinned by expectations of redemption flows related to LTRO repayments by EU banks as evidenced by higher Euribor rate fixings. Also, aggressive exodus of long Euribor positions is said to have been a contributing factor behind the bid tone in Bunds this morning, trading little changed at last check. Going forward, markets will get to digest the release of the preliminary U. Michigan survey for the month of January, as well as the latest Treasury purchase op by the NY Fed.
Print 11:57, 18 Jan 2013 - Market Analysis - Source: RANsquawk
RANsquawk provides audio news and commentary for over 15,000 professional traders and brokers worldwide. Services include: