AUD and NZD are outperforming ahead of the NA session as market participants consider the possibility of further easing from China’s PBoC, with most of the remaining G10 currencies quiet and consolidating vs the USD. The broader market tone hints to moderate risk aversion, as we note that both equity futures and U.S. yields are being pressured lower on the back of concerns related to Greece and Libya. Greek political risk has escalated following the failure of a third and final presiden-tial election, shifting the focus to a general parliamentary election anticipated to take place next month—with a debate centered on debt restructuring, the election will likely complicate the ECB’s consideration of sovereign QE ahead of the Jan 22 meeting. Meanwhile, Libyan oil exports are being threatened by renewed conflict following a recent attack on the country’s largest export terminal—oil prices have yet to react materially (see chart). The focus through the NA session is likely to remain centered on these broader issues in the absence of high-level U.S. releases with the Dallas Fed manufacturing index the only release.
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