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Forex Blog - European Market Update: Goodbye 2008; will next year be characterized by a series of "binomial distributions at polar extremes."
European Market Update: Goodbye 2008; will next year be characterized by a series of "binomial distributions at polar extremes."
*** ECONOMIC DATA ***
- (RU) Russia Q3 Current Account: $27.6B v $27.9Be
- (HU) Hungary Q3 Current Account: -â‚¬2.49B v -â‚¬1.85Be
- 4:00 (HK) Nov M3 Money Supply: -11.9% v -14.7% prior
- (RU) Russia Dec Consumer prices Y/Y: 13.3% v 13.5%e
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
-Equities: Aberdeen Asset Management [ADN.UK] Credit Suisse confirmed sale of a portion of its stake in firm || Roche [ROG.SZ] FDA approves new HIV test for donated blood || Alitalia [AZA.IT] Italian Press reports that Air France is interested in purchasing 25% stake for â‚¬300M || UBS [UBSN.SZ] confirmed the sale of its entire stake in Bank of China [3988.HK] for $835M || Citigroup [C] Completed the sale of its Global Services unit to Tata Consultancy for $512M; sees reducing over 12K jobs in India || Vestas Wind System [VWS.DC] Awarded two additional orders for 100 MW capacity in China ||
- Speakers: China's PBOC: To continue its pursuit of "moderately loose" monetary policy adding that the fundamentals of economy have not changed. To increase usage of financial tools in order to support the economy and promote stable growth of money supply and lending. The central bank reiterated that it would keep Yuan currency (CNY) stable at a reasonable and balanced level. Lastly it sought to ensure ample liquidity in its banking system ||Chinese Pres Hu Jintao stated that China would continue to seek 'relatively' fast growth and commented that the country must increase its domestic consumption. He expressed that China sought the peaceful development of cross-strait relations || Singapore PM Lee commented that the current economic slump experienced in Asia was more difficult than the one back in 1997. He did note that the Singaporean economy grew 1.5% in 2008. -He did add that the global economy would not encounter a quick rebound in 2009, thus growth outlook remained uncertain ||Israel rejected calls for an immediate cease fire in Gaza and labeled France's proposal for a 2-day Gaza truce as 'unrealistic' ||Israeli Security Cabinet will hold discussions on the proposed Gaza truce and reviewing proposals for a permanent truce in Gaze || Chinese Cabinet approved the issuing of 3G mobile phone licensing noting that the conditions are ripe to issue TD-SCDMA 3G licenses. It has yet to name winners of 3G licenses ||
- In Currencies: GBP/USD: Dealers note that GBP set for its worst annual performance since 1972 . The GBP/USD pair opened the 2008 calendar year at 1.9861 and is currently at 1.4460, a loss of 54 big figures or 27.2% against the USD|| The USD is poised for its largest drop against the JPY since 1987 with a 19.2% drop. The USD/JPY open the year at 111.65 and is currently around the 90.25 level|| The CNY had its largest annual gain sin the peg was removed with a 7.1% gain against the USD in 2008 compared to 6.9% gain in 2007. The month of Dec saw the CNY appreciate by 0.9% || Russia Gold and FX Reserves at $438.2B, down $12.6B w/w ||
- Fixed Income: Dealers noting that the spread between Gilts and Bunds at 11.6 bps; narrowest level since Q4 2002
- Energy: Iraq commenced its second round of oil and gas bids for international companies. To auction 11 oil and gas fields and expects to sign contracts next year ||
- Commodities: As noted in our Asian update Overall NYMEX crude oil prices are on track to have their largest annual decline since trading began in 1983.|| As the end of 2008 nears, gold is on track for its 8th consecutive annual gain.
- Credit Crisis: WSJ noted that the effort to give bankruptcy judges the power to rewrite mortgages is gaining momentum. The measure has been gathering steam in Democrat-controlled Washington, following evidence that the current voluntary foreclosure-prevention programs are not sufficient. || WSJ is cautious on the 2009 outlook for banks in Europe noting that next year could be difficult for European banks as a rise in corporate bankruptcies adds to their problems with bad mortgages and credit-card loans. Some analysts are predicting billions of euros in write-downs for banks as more companies run into problems and become unable to pay their debts. || Brazil to reportedly ease bank accounting rules in a measure viewed at facilitating credit.
TTN European staff presents its warmest regards for 2009. Wishing all a happy, healthy, and prosperous 2009!!!
- One European dealer commented that 2008 goes down as the year with more â€śOMGâ€ť moments endured than in the previous 5 combined. The dealer pointed out that next year would be characterized by a series of â€śbinomial distributions at polar extremes.â€ť To summarized this dealer the big questions looming are:
a) Does the US economic rescue measures take hold before the negative feedback loop of unemployment and bankruptcies rule the next wave?
b) Does China and India gain in their efforts to develop domestic economies, integrate into the global economy, and help pull the world out of global recession, or do they redefine emerging/submerging markets?
c) Will selling volatility ever return or are the recent volatility levels here to stay?
d) Lastly, who will the banking/corporate survivors when we review 2009?
- 7:00 (US) MBA Mortgage Applications: No estimate versus 48.0% prior
- 8:30 (US) Initial Jobless Claims: Expectations for 575K versus 586K prior; Continuing Claims: Expectations4.400M versus 4.367M prior
- 10:00 (US) Dec NAPM-Milwaukee: No Expectations versus 35.0 prior
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