Intraday Market Thoughts

EURJPY at 10-Year Low Under 100, Quiet Markets

by Patrik Urban
Dec 30, 2011 11:52

German finance minister ruled out Eurozone breakup; UK house prices fell; Italian PPI rose m/m but declined y/y, Spanish annual CPI lower; France announced bond auction on January 3rd. EURJPY reached decade's low. Progress on Premium trades is found below.

The greenback is consolidating yesterday's gains and trades little changed. European equities are mixed between -0.2% to +0.4%. Relative strength winners are NZD and JPY.

German finance minister Wolfgang Schaeuble said today that Eurozone has the risk of contagion under control and ruled out Eurozone's breakup. He also reiterated that the ESM rescue mechanism will be implemented in Q1 with ESM active in mid-2012.

In the UK, nationwide house prices fell in December -0.2% from previous 0.4% m/m which translates to 1% from 1.6% y/y. Expectations are for weak activity throughout 2012 with flat or modestly lower prices. GBPUSD trades around 1.5450

On the data front, Italian PPI rose in November in line with expectations 0.2% after -0.2% contraction in October which is 4.5% from 4.7% y/y. Spanish annual CPI declined in December to 2.3% from November's 2.9%. Another sobering news came from Greece as October retail sales dropped nearly -11% y/y after -6.5% in September.

Attention on bond auctions is likely to continue as France announced today that it will attempt to sell EUR 4 4.5 bln in 3 month bills, EUR 1.8 2.2 bln 6 month bills and EUR 1.8 2.2 bln 11 month bills on January 3rd, 2012. According to MNI calculation, the total Eurozone bond issuance was EUR 821 bln in 2011.

EURJPY fell below 100 on EBS today for the first time since June 2001. The follow through has been minimal so far and pair recovered to 100.20 level.

Thursdays Premium Intermarket await the 99.80 target in the EURJPY short as well as both shorts in USDCAD. USDJPY hit all targets, while both gold & silver shorts were stopped out as the Aussie shorts. One EURUSD short is in progress. Direct Access access/?a=576 Nonsubscribers can obtain a free 1-week trial here:

There are no fundamental data releases during the NY session.

Wishing everyone a prosperous & healthy New Year


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