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European Market Update: Markets Quiet Ahead of Tomorrow's Rate Decisions
Update: Markets Quiet Ahead of Tomorrow's Rate Decisions
ยท *** ECONOMIC DATA
ยท UK Jan Nationwide Consumer Confidence: 81 v 83e
Jan Permanent Placements 51.4 v 50.7 in Dec; Jan permanent salaries 57.1 v
58.2 in Dec [NTC/REC]
ยท *** SPEAKERS/COMMENTS
ยท According to Vocalink, UK take- home pay in Jan rose by 2.8% v
3.4% in Dec.
ยท EU's Juncker says that Europe is to bring up FX at
G7, says EUR can't bear imbalances by itself
ยท UK Former BOE
Official Nickell: Sees 25bps rate cut at Thursday MPC meeting as likely ||
Does not see any chance of a 50bp cut by the BOE this week || The UK
housing slump will not be that big
ยท *** FIXED
ยท While the Chinese markets were
closed as fireworks littered the horizon during the New Year celebrations,
the European markets echoed the holiday sentiment, as there were no major
economic releases, nor were there any speakers. Trading was volatile, with
the European indices spending time in both the red, and the green. Amongst
those reporting positive results in Europe overnight were BskyB, and France
Telecom, while Volvo and Moet Hennessy reported less favorable results.
Amongst the bid names due out during the US pre-market today are Time
Warner, Cigna, Sara Lee, and Devon Energy.
ยท European fixed income
futures were also volatile overnight. Yield curves continue to flatten
ahead of tomorrow's interest rate decisions. While most believe that the
ECB will continue to live by its price-stability-mantra (ie. hold rates),
many believe that the BOE will cut rates tomorrow. Former BOE MPC member
Nickell commented in an interview overnight noting that he expects that the
BOE will cut rates by 25bps tomorrow, and added that there is no real
chance of a 50bps rate cut. Recall that the Times' shadow MPC had a split
vote this weekend. Perhaps tomorrow's rate decisions will make up for the
lack of excitement in today's session. Trading is likely to remain
technical for the remainder of the session as there are no major economic
releases scheduled in the US today, however there are a few Fed speakers
peppered in here and there during the afternoon.
ยท On the commodity
front crude oil futures remain below the $90-handle ahead of today's
inventory data. Elsewhere spot gold is trading higher in the session but
remains below the $900-level.
ยท The USD remains mixed among the
major pairs in choppy trading on Wednesday. Risk aversion continues to
provide some firm footing for JPY and CHF as global equity markets linger
on the soft side. European bourses followed the Asian shares into negative
territory on the open sending USD/JPY towards the 106-level and EUR/JPY
near the 155-level before consolidating. The EUR/USD holding above the 1.
4600-level with dealers noting that Euro sell stops are building below the
1.4590-level. Selling of Euros led by Eastern European names through the
session. The GBP softer across the board ahead of the BOE rate decision on
Thursday. Growing expectation of a 25bps cut among dealing desks. The CAD
probing towards its 1.0110 Jan pivot point. CAD off its worst level as oil
and gold rebounded from their perspective session lows.
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