Intraday Market Thoughts

ECB Deposits at New High, German Bills Hit Negative Yield, Aussie Worst Performer

by Patrik Urban
Jan 9, 2012 12:11

German trade surplus higher but industrial production declined; Eurozone Sentix investor confidence improved; ECB deposits reached a new high and German auction sees a negative yield for the first time ever. Market turns to Merkel/Sarkozy press conference, Canadian building permits and US consumer credit. Aussie is the weakest performer despite improved risk appetite after disappointing Aussie retail sales. Ashraf's Premium Intermarket Insights are due ahead of the US opening bell.

EURUSD fell to 1.2667 in early Asian trading but has recovered to 1.2785 during the London session. USD trades lower across the board, major European equities are lower by about 0.25% and the relative strength winner is NZD.

German data was mixed today as the trade surplus was better than expected and higher in November at EUR 15.1 bln from previous EUR 12.5 bln but the industrial production declined -0.6% in November after growing 0.8% previously. This fall pulled the annual figure to 3.6% from 4.2%.

Eurozone Sentix investor confidence improved slightly to -21.1 in January after falling to a two year low at -24 a month earlier. This marks the first improvement in five months.

In other news, the ECB said today that overnight deposits reached another high on Friday at EUR 463.6 bln, about EUR 8 bln more compared to last Thursday and Germany paid a negative yield at a bill auction today for the first time ever. It sold EUR 3.9 bln worth of 6 month bills with average yield -0.0122% from previous 0.001%. However, bid to cover fell considerably to 1.8 from 3.8.

Market volatility could increase when chancellor Merkel holds a joint press conference with president Sarkozy in Berlin today at 7:30 am ET and also at 10:30 am ET when Merkel speaks at a conference of the DBB trade union.

The NY session will bring Canadian building permits at 8:30 am ET that are expected to decline -3.1% in November after surging 11.9% in October. CAD traders should also pay attention at 10:30 am when the BOC releases its business outlook survey.

US data is limited to consumer credit due at 3:00 pm that is seen lower in November at USD 7 bln from previous USD 7.64 bln.

Market volatility could also increase at 12:40 pm when Atlanta's FED president Dennis Lockhart speaks about the US economy in Atlanta.


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