Volumes are expectedly thin ahead of Christmas Day with a lack of macroeconomic data and newsflow to give direction to markets
RANsquawk European Morning Briefing Video: http://youtu.be/0dUJR8Fh_bA
European morning trade has demonstrated expectedly thin volumes so far, with no newsflow to drive markets and many participants away ahead of Christmas Day tomorrow. Following the short sterling open downside has been observed across the strip after reports in UK press speculating that the Bank of England will defy expectations and raise interest rates next year. Another mover has been the USD which has weakened throughout the morning, trading at session lows and benefiting the majors with EUR/USD and GBP/USD trading at the best levels of the day. Weekend reports in Italian press that the Italian PM Monti is undecided about heading a list of centrist parties in Italian elections has done little to dampen mood in Europe, although the CAC trades down on the day by 0.2% with Vallourec down for a third straight day after S&P forecast no increase in the company’s EU segment profits. The FTSE 100 is outperforming, up just 0.2% with mining stocks leading the way forward after a rebound after selling pressure seen last week.
No economic data or speakers are scheduled today, and as a reminder products in Europe and the US close early ahead of tomorrow’s holiday; US products open as usual today but will all close by 1830GMT.
Japan’s PM-in-waiting Shinzo Abe has threatened to revise the law governing the Bank of Japan if it refuses to introduce a 2% inflation target at its January policy meeting.
EU & UK Headlines
Italy’s outgoing PM Mario Monti has ended speculation over his future by declaring his readiness to shed his neutrality and office early next year if he sees “credible” support emerging for his reform programme. In related news Monti is undecided about heading a list of centrist parties in Italian elections according to reports in La Repubblica.
Reports in the Sunday Telegraph said The Bank of England will defy expectations and raise interest rates next year on the back of a solid recovery and rising inflation, according to senior economists at a number of private institutions.
The FTSE 100 is outperforming the CAC heading into the early European close, with UK mining stocks the strongest performers. This comes following the selling pressure seen in mining stocks last week.
USD weakness has been observed throughout the morning session, trading in light volumes heading into the Christmas period. GBP/USD trades close to a vanilla option expiry at 1.6200 for today's cut at 1.6183 (+11 pips), last price taken at 1206GMT.
Despite USD weakness, USD/JPY has moved higher throughout the session after the comments from incoming Japanese PM Abe, who noted that a level of around 90.00 in USD/JPY would support exporters and also threatened to revise the law governing the BoJ if they were not to introduce a 2% inflation target at their next meeting.
Crude futures trade within a tight range in light volumes heading into the festive holiday period, and there is no economic data scheduled during today's session. As a reminder the NYMEX pit and electronic trade close early at 1830GMT/1230CST.
RANsquawk Desk Open Until 1830GMT (1230CST)
CME/CBOT – Interest Rates, FX, Commodities (Early Close 1800GMT/1200CST) Equities (Early Close 1815GMT/1215CST)
NYMEX/COMEX – Early close (1830GMT/1230CST)
NYSE – Early Close (1800GMT/1300EST)
CME Globex – Equities, Interest Rates, FX (Early close 1815GMT/1215CST)
NYMEX – Early close (1830GMT/1230CST)
NYSE LIFFE – Early close (1300GMT/0700CST)
Eurex - Closed
Print 12:46, 24 Dec 2012 - Economic commentary - Source: RANsquawk
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