Yesterday
SEK - (Bullish) Sweden's Annual pace of decline in unemployment rate is slower than in October, but at 0.7% on the year, the pace of decline in unemployment is still robust.
A rate hike tomorrow and the promise of future rate increases in the Riksbank's inflation report is still very much on the cards.
CHF - (Neutral) The SNB has raised the range for 3-month libor by 25bp to 1.50%-2.50%, moving the target to 2.00% from 1.75% - as expected. According to the SNB, the reasons for the big downward revision of Swiss inflation are 1) lower oil prices, 2) the opening of the labour market, and 3)the SNB's proactive monetary policy. As consequence the SNB sees limited inflationary pressure untile the Q3 2009 end of the forecast horizon.
OIL - (Turning Bullish) A sliding Greenback would pressure OPES to push oil prices up. which is why several Opec members, including Saudi Arabia, have talked up the chances of another cut. But Saudi's contribution may be as much for internal consumption as anything else. Yesterday, the International Energy Agency said Opec had only cut 610,000 b/d since October. Small cuts by Venezuela and Iran were largely down to maintenance. Saudi, tired of shouldering the lion's share of real cuts, may press others to take action. A further cut would be both unnecessary and difficult to enforce. A $60 floor has already been established, which should be a signal for more, rather than less, output. Oil inventories have already dropped. If winter intensifies, the market could be left short in the first quarter of 2007 and oil might spike back over $70, hurting overall demand. The problem is, despite some softer words from Saudi yesterday, Opec's rhetoric has stoked expectations of another cut, so the oil price could well fall, even if one does not come.
USD - (Turning Bullish) The sinking U.S. real estate market, whose meteoric rise in the last five years allowed consumers to draw on their housing equity to spend freely, has become the wild card in the outlook for 2007. To be sure, only a minority of economists now believe that the housing bust will spill over into the rest of the U.S. economy and trigger a full- blown recession. The U.S. Federal Reserve left its interest rates untouched Tuesday for the fourth straight time, holding firmly to its position that a slowing economy will subdue inflation in the months ahead.
EUR - (Neutral) ECB has signaled it is likely to raise interest rates further, arguing that inflation pressures persist in the 12 countries using the euro. A euro-zone inflation rate of 1.9%, while still within the preferred range, could herald higher 2007 inflation than euro-zone central bankers currently forecast.
Today
JPY - (Neutral) (From AFX) The Tankan survey of business sentiment for large manufacturers confirmed a continued recovery in the industrial sector but it may not be a strong incentive for the Bank of Japan to raise interest rates this year, said Norio Miyagawa, an economist at the Shinko Research Institute. The Bank of Japan said the headline diffusion index for large manufacturers jumped to 25 in the December survey from 24 in September, marking the third straight quarter of improvement and matching market expectations.
Later
1700h - EUR : Italian Trade Balance
1800h - EUR : Eurozone CPI
2130h - USD : CPI / Empire Manufacturing
2200h - USD : TIC Data
2215h - USD : Industrial Production
Technicals
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