Developed macro
1. It increasingly looks as though it will be sour end to the year for markets, with hopes of a year end rally fading fast.
2. German Chancellor Merkel to address parliament today.
3. We expect the Norges Bank to remain on hold, but the market is looking for a rate cut.
Interest rate strategy
1. The 5Y BTP auction is a key event today, with € 2 – 3 bn on offer. There are both positive and negative signals going into this
2. Core rates close to the bottom of the range are closer still to a tactical sell, lacking significant developments in either way and a reasonable amount of policy disappointment.
FX strategy
1. USD: Fed patience removes obstacles for further gains.
2. EUR: Auctions raise risks heading into year-end.
3. Technicals: USD index keeps surging despite unconfirmed overbought signals, which looks like a classic underlying trend.
Emerging markets
1. Further signs of policy easing prospects in China
2. Indian inflation to drop, opening door to rate cuts, but do not expect one this week yet
3. South Africa’s inflation up for now, fuelling reluctance to ease
Commodity markets
1. IEA Medium term outlook: oil market tensions to ease in the next five years.
Click here to read the full report:
http://www.easyforexnews.net/wp-content/uploads/2011/12/WMT_2011-12-14.pdf
CREDIT AGRICOLE
CORPORATE AND INVESTMENT BANK