- Chinese data misses
- UK PPI mixed
- Nikkei off -0.63% Europe -0.18%
- Oil at $96.28/bbl
- Gold at $1578/oz.
- EUR German Consumer Price Index (MoM) 0.2% vs. 0.1%
- GBP Producer Price Index Input n.s.a. (MoM) -1.5% vs.
- GBP Producer Price Index Output Core n.s.a. (MoM) 0.7% vs.
Event Risk on Tap
- USD Producer Price Index (MoM) expected at 0.0%
- USD Producer Price Index Ex Food & Energy (MoM) expected
- USD U. of Michigan Confidence expected at 76.4
- CAD Unemployment Rate expected at 7.3%
- CAD Net Change in Employment expected at 10.0K
- USD/JPY rises 79.0
- AUD/USD bounces after testing lows at 1.0020
- GBP/USD quiet as data has little impact 1.6120
- EUR/USD bounces as 1.2900 holds for now
After plumbing fresh lows in Asian session trade risk FX bounced
in midmorning European dealing on speculation that Greece may
cobble together a working coalition government without resorting to
another Parliamentary election. Earlier in the session weak Chinese
economic data and a massive unexpected loss from JP Morgan kept
risk FX under pressure with EUR/USD coming within a few points of
the 1.2900 barrier while Aussie drifted lower towards parity. JP
Morgan reported a trading loss of more than -2 Billion dollars in
credit derivatives as a result of hedge gone wrong by its CIO
office in London.
Meanwhile in China industrial production weakened to it lowest
level in nearly a decade printing at 9.3% versus 14.1% eyed.
Retails Sales were also softened to 14.2% versus 15.1% forecast
while fixed investment slipped to 20.2% versus 20.5% and CPI came
in line at 3.4%. The data showed that Chinese growth is clearly
slowing and may weaken further if the situation in Europe
deteriorates further dampening demand from China's largest export
However risk FX reversed its losses after Greek officials
reported that chances of a coalition government that would
encompass conservatives, moderates and socialists and would have a
two year mandate were increasing. Although the prospect of some
political stability in Greece eased investor concerns, it still
remains to be seen if any future Greek government will abide by the
bailout terms set by the Troika. Nevertheless, the news helped to
calm the credit markets and the well subscribed Italian bond
auction which placed 10 Billion euros at bid to cover ratios of
2.49 from 1.81 the period prior and yields of 0.865% vs. 1.249% all
helped to firm up risk assets as the night progressed.
In UK the PPI data printed mixed with input declining by -1.5%
vs. -0.9% eyed while output rose to 0.7% from 0.4% forecast. The
drop was largely due to sharp decline in oil prices. Output prices
remained elevated at 3.3% on annual level, but were still at their
lowest pace of growth since 2009. The news was relatively neutral
to any future BOE monetary policy considerations and had little
impact on pound trade as the pair remained near its session lows at
In North America today the markets will get a glimpse of the US
PPI data, U of M survey and Canadian jobs report. However, the
focus will likely remain in JP Morgan as traders try to assess the
long term impact of the large trading loss the bank has suffered.
For now the reaction has been relatively contained, but if US
investor begin to sell off the financials as the day proceeds risk
FX will likely return to session lows with EURUSD testing the
1.2900 barrier while Aussie probes parity.
||Producer Price Index (MoM)
||Producer Price Index Ex Food & Energy (MoM)
||U. of Michigan Confidence
||Net Change in Employment