Merkel Remains Against Eurobonds, Euro Still Pressured
The forex market wasnt as sleepy as might be expected with the US closed for holiday. Asia is modestly in the red. Japan Core CPI posted 1st annual drop in 4 months, falling 0.1%,.
A mild risk-on trade was wiped out in early US trading after Merkel said Eurobonds are not needed and not appropriate at a press conference with Monti and Sarkozy. Her comments suggested Germany will press for more austerity.
Local press are starting to raise more concern after yesterdays failed bund auction. Yields on German 10-year notes rose as much as 12 basis points but still yield just 2.26%. It may take a rise above 3% or 3.5% to convince German leaders that new ideas are warranted.
The euro fell after the Merkel comments but sterling was the larger laggard, falling below 1.55 for the first time since Oct 6.
MNIs China November Business Conditions Survey
Japan Core CPI posted 1st annual drop in 4 months, falling 0.1%. This pushing USDJY back to 77.40s, while EURJPY recovers 50 pips from its 102.70s lows.
Our Wednesday Premium trades hit their targets in one of the EURUSD & EURJPY trades, while another remained unfilled. Oil hit all targets on the 1st short, while the other remains working. Here is direct access to those trades http://ashraflaidi.com/products/sub01/access/?a=555
Tomorrows key events include Italy 6-month T bill auction 8.0 bln. 10- yr BTPs trades at 7.1%; pushing ITA-GER 10- yr spread to 4.9%. Italian retail sales are also due.
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