Market Analysis

ECB Liquidity Infusion Opening Up For Jolly Holidays
The record liquidity infusion yesterday created a positive sentiment that it should help alleviating the financial crisis

Overnight News Bullets

• SZ Adjusted Real Retail Sales (Oct), out at 2.2% vs. 5.2% exp. 7.1% prior.
• UK CPI MoM/YoY (Nov), out at 0.3%/2.1% vs. 0.3%/2.2% exp. 0.5%/2.1% prior.
• UK Core CPI YoY (Nov), out at 1.4% vs. 1.6% exp. 1.5% prior.
• UK Retail Price Index (Nov), out at 209.7 vs. 209.6 exp. 208.9 prior.
• UK RPI MoM/YoY (Nov), out at 0.4%/4.3% vs. 0.3%/4.2% exp. 0.4%/4.2% prior.
• UK RPI Ex Mort Int. Payments (Nov), out at 3.2% vs. 3.1% exp. 3.1% prior.
• E-Z Euro-Zone Trade Balance nsa (Oct), out at 6.1B vs. 3.5B exp. 3.1B prior.
• E-Z Euro-Zone Trade Balance sa (Oct), out at 4.0B vs. 3.0B exp. 3.9B prior.
• CA Consumer Price Index MoM/YoY (Nov), out at 0.3%/2.5% vs. 0.2%/2.4% exp. -0.3%/2.4% prior.
• CA Bank Canada CPI Core MoM/YoY (Nov), out at 0.0%/1.6% vs. 0.2%/1.8% exp. -0.2%/1.8% prior.
• UK Total Business Investment QoQ/YoY (3Q F), out at 2.0%/6.6% vs. 0.0%/4.6% exp. 0.0%/4.6% prior.
• CA Leading Indicators MoM (Nov), out at 0.0% vs. 0.1% exp. 0.1% prior.
• US Housing Starts (Nov), out at 1187K vs. 1176K exp. 1229K prior.
• US Building Permits (Nov), out at 1152K vs. 1150K exp. 1178K prior.
• NZ Visitor Arrivals (Nov), out at 2.8% vs. -2.6% prior.
• NZ Food Prices (Nov), out at 0.4% vs. 0.6% prior.
• US ABC Consumer Confidence (Dec 16), out at -17 vs. -23 prior.
• AU Westpac Leading Index (Oct), out at 0.5% vs. 0.8% prior.
• JN All Industry Activity Index (Oct), out at 1.2% vs. 1.1% exp. -1.6% prior.
• AU DEWR Skilled Vacancies MoM (Dec), out at 1.9% vs. 0.6% prior.
   
• Markets
  FX: EURUSD consolidating around 1.4400, Yen weakness with risk appetite picking up. 
• Stocks: Slight positive sessions in Europe and US helped by ECB liquidity injection. Asia up on average, though Nikkei down
• Fixed Income: Treasuries supported by the liquidity infusion.
• Commodities: Oil still supported above 90$ a barrel. Precious metals lacking direction

O/N Data Heat map:

Calendar
 
Today's Highlights:

This and Next Week’s Highlights:

What's going on?

• The ECB has added 350 billion EUR to the money market. Interbank rates have declined 50 bps. in the aftermath of the liquidity injections.
• The Japanese government is revising growth forecasts to 1.3% annualized from 2.1% prior due to stricter rules for building permits and collapsing housing starts. JPY edging lower.
• USD crosses completely lost momentum in the past 50-60 hours. A break-out might be imminent. Most likely to the upside.
• US stocks closing higher after having made new 3-week lows. Nasdaq looks weakest.

FX

 

FX Trading Strategies

Equities
 
Liquidity Infusion - The Last Push For a “White Christmas”?

 

The Liquidity Infusion by the ECB y’day was and is viewed as rather positive news, in addition Goldman Sachs showed some positives in that they managed to gain in the worst quarter of Wall Street since ’01 however they remained somewhat bleak on the future. Today’s important events is Minutes from Bank of England and Morgan Stanley reporting Q4 earnings.

Equity Trading Strategies

Trading Strategy: With a bullish sentiment entering the day, we are looking to buy Deutsche Post (DPWGn:xetr) we like the risk/reward setup and see the uptrend intact. We are looking to buy between 23.00-23.25. Setting a stop at 22.80. Pushing for a target of 25. 

Equity Index Levels