Intraday Market Thoughts

EUR Stabilizes Despite Looming Risks, AUD Rebounds in Asia

by Adam Button
Jan 10, 2012 2:24

Risk trades are marching higher on optimism about the US economy. The yen is lagging in early Asia-Pacific trading while AUD surges ahead. Upcoming data on Chinas trade balance is a risk. Ashrafs Monday trades including EURUSD, EURGBP, USDJPY, AUDUSD, US crude and gold & re currently in progress. For more detail on our latest Premium trades, including US crude, EURUSD & AUDUSD. please click here: NON-subscribers can click here to join:

Trading was somewhat lackluster to start the week but the general tone was for improvements in risk assets. Sarkozy and Merkel met and said they want a deal to strength fiscal oversight in the Eurozone by March.

Weighing on optimism were growing problems with the Greek debt swap. The end-of-the month deadline is in danger and Greece may be asking for more than a 50% haircut. A failure in the negotiations would likely be the last straw that forces Greece out of the currency union. Various reports suggest that leaders are growing increasingly frustrated with deficit reduction progress.

The focus is also shifting back toward Ireland where there is talk about debt holders being forced to take a haircut. It is a situation that will certainly come back into focus in the coming months. Other debt auctions are another concern as the hoped-for drain of ECB deposits fails to materialize.

Early in Australian trading, data on building permits showed an 8.4% rebound in November after two months of declines. The gain exceeded the 6.0% expected and has helped to boost AUD and NZD in early trading.

Chinese Trade Balance

Chinese trade data will be released shortly. The trade balance isnt as important as the growth in imports and exports. The consensus is for a 22.1% import rise with exports growing 13.8%. The market often overlooks these numbers but they generally provide a strong hint about other figures, especially industrial output, which will be released Jan. 17.

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