Intraday Market Thoughts

Euro Pauses, EU Banking Union Sees the Light

by Patrik Urban
Dec 13, 2012 12:40

Eurozone Fins Mins move on Banking Union, USD recovers partially; SNB keeps rate target 0-0.25% but lowers outlook; EU summit begins; UK CBI orders rose; Italian and Spanish auctions. Focus turns to PPI; retail sales and jobless claims. Both of last nights EURUSD longs are in progress, alongside GBPUSD, AUDUSD, USDJPY, EURJPY and US crude oil. See below for detail.

The 1st step of European Banking Union has been agreed upon in the early hours of Thursday whereby ECB begins supervising banks with over EUR 30 bn in assets, effectively excluding most of Germanys saving banks. This will cover about 200 banks in Europe. ECB will have the power to intervene and set the day-to-day procedures for national supervisors, but no word on whether it will have ultimate responsibility.

A large part of gains that followed after the FOMC decision to buy USD 45 bln in treasuries per month was announced has been lost as USD recovers. Even gold and WTI are under pressure trading around 1695 and 86.20 respectively.

The SNB kept the libor target rate unchanged at below 0.25%. The growth for 2012 is seen at 1% and in 2013 should be 1.0%-1.5%. 2012 inflation is seen declining further to -0.7%, in 2013 should reach -0.1% and in 2014 +0.4%. The SNB is ready to take further measures as downside risks remain considerable. President Jordan did not exclude negative rates. EURCHF fell from 1.2124 to 1.2088.

A two day EU economic summit begins today and Eurozone finance ministers meet in Brussels to discuss Greece. The EU summit will deal with details of EU economic and monetary union. French press reported that new confrontation is on the cards, MNI reports.

UK CBI industrial order expectations rose in December to -12 from November's -21 substantially above analysts' expectations of -17. The expected output reached 0 from -9.

Spain reached a full take up at EUR 2 bln for its 2015, 2017 and 2040 bonds. Italy sold 2015 and 2026 BTPs totaling EUR 4.224 bln vs. 4.25 bln target.

The US session begins at 8:30 am with PPI that is expected to slow in November to 1.8% from 2.3% (core PPI is seen higher at 2.2% from 2.1%) on annual basis. Retail sales are anticipated to rise 0.5% from -0.3% while core sales are seen flat and finally jobless claims are expected to decline marginally to 368K from previous 370K.

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Act Exp Prev GMT
CBI Industrial Trends Survey - Orders (DEC) (m/m)
-12 -16 -21 Dec 13 11:00
Continuing Jobless Claims (DEC 1)
3.198M 3.210M 3.221M Dec 13 13:30
Initial Jobless Claims (DEC 8)
343K 370K 372K Dec 13 13:30
Retail Sales (NOV) (m/m)
0.3% 0.5% -0.3% Dec 13 13:30

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