GBP Weakness in the Forex Market in Result of Moody’s UK Downgrade

Up, up, and away! Says the Euro to the GBP.

Moody’s downgrade of the UK’s prestigious AAA rating was a wake up call to the United Kingdom late on Friday.

What Did Moody’s Say? According to Moody’s the UK has “sluggish growth which Moody’s now expects will extend into the second half of the decade”.

Another reason for the UK downgrade according to Moody is it’s increasing debt: “And, as a consequence of the UK’s high and rising debt burden, a deterioration in the shock-absorption capacity of the government’s balance sheet, which is unlikely to reverse before 2016.” (Moody’s)

The EURGBP could be on it’s way through the critical .883 level in the next week or two if this momentum continues.

Yen News The Yen is also hitting new Yen lows against the United States Dollar. With a new BOJ governor to be set in place soon, it is very likely for the Yen’s volatility to be high in the near future.

 

Asian Market Update: Greek PSI offer rejected, Japan fiscal and economic outlook cloudy, IMF to Aussie banks - raise your capital

For the second consecutive day only Australia and Japan were open due to the New Year's celebrations, equities markets were decidedly more positive today with hopes that a resolution may be reached for Greece. EU's Juncker said that the PSI must ......

Asian Market Update: Japan sees first trade deficit in more than 3 decades in 2011; Australia inflation at a multi-year low

***Economic Data*** - (JP) JAPAN DEC MERCHANDISE TRADE BALANCE: -#165;205B V -#165;170BE; ADJUSTED TRADE BALANCE: -#165;568B V -#165;385BE (multi-year low); 2011 Trade deficit #165;2.49T (1st deficit since 1980) - (AU) AUSTRALIA Q4 CONSUMER ......

European Market Update: UK Q4 GDP contracts; German IFO survey mixed; All eyes now on FOMC statement and forecasts

***Economic Data*** - (EU) ECB: #8364;3.6B borrowed in overnight loan facility v #8364;3.4B prior; #8364;485.8B parked in deposit facility vs. #8364;490.5B prior - (FI) Finland Dec Preliminary Retail Sales Volume Y/Y: 1.8% v 2.5%e - (TH) ......

Asian Market Update: Fed comments give a boost, but markets cannot sustain with continued global uncertainties; Singapore GDP at multi-year low

***Economic Data*** - (KR) SOUTH KOREA Q4 PRELIM GDP Q/Q: 0.4% V 0.5%E; Y/Y: 3.4% V 3.5%E - (SG) SINGAPORE DEC INDUSTRIAL PRODUCTION M/M: 7.8% V 2.2%E; Y/Y: 12.6% V 6.4%E - (JP) JAPAN DEC CORPORATE SERVICE PRICE INDEX Y/Y: 0.1% V 0.0%E (1st ......

European Market Update: Risk appetite buoyed by reports that private lenders said to have accepted lower interest rate in Greek PSI deal

***Economic Data*** - (EU) ECB: #8364;3.5B borrowed in overnight loan facility v #8364;3.6B prior; #8364;484.1B parked in deposit facility vs. #8364;485.8B prior - (RU) Russia Gold Forex Reserve w/e Jan 20th: $499.7B v $497.1B prior - (DE) ......

Asian Market Update: NZ reports trade surplus; Yen continues to strengthen

***Economic Data*** - (NZ) NEW ZEALAND DEC TRADE BALANCE (NZ$): +338M V -50ME (1st surplus in 5-months) - (JP) JAPAN DEC RETAIL TRADE M/M: 0.3% V 0.4%E; Y/Y: 2.5% V 2.1%E (16-month high); LARGE RETAILERS' SALES Y/Y: % V -0.6%E - (JP) JAPAN D...

KBC: Market no longer bets on rate cuts in Poland in 2012. Polish economy grew by 4.3 % in 2011

Central European currencies firmed again on Thursday. The Polish zloty extended its winning streak and strengthened against the single currency in a fourth consecutive session. The zloty posted gains in 15 of 19 sessions so far this year and the EUR/PLN c...

European Market Update: EU's Rehn expresses optimism of a Greek PSI at some point before the weekend is over

***Economic Data*** - (EU) ECB: #8364; borrowed in overnight loan facility v #8364;3.5B prior; #8364; parked in deposit facility vs. #8364;484.1B prior - (RU) Russia Narrow Money Supply w/e Jan 23rd (RUB) 6.80T v 6.83T prior - (IN) India ......

Asian Market Update: Markets tumble on EU downgrades, Australia home loans climb for the 8th month

Asian equity markets traded to the downside after the SP cut several EU sovereign ratings on Friday. On renewed risk aversion saw the the dollar gain against all the majors, seeing the biggest gains against the A$. Euro held steady down 0.3% to the $1.26...

US Market Update: US equity Markets closed for Federal holiday

- (PE) Peru Dec Unemployment Rate: 7.0% v 7.0% prior - (PE) Peru Nov GDP Y/Y: 5.0% v 4.7%e - (BE) Belgium Nov Trade Balance: -#8364;679.5M v #8364;207.4M prior......

European Market Update: Risk appetite finds footing aided by China GDP data and German ZEW survey

European shares recovered their losses taking cue from Asian trading even after China's data showed economic slowing. As expected, SP downgraded EFSF rating to AA+, an action which did not move markets. However, German ZEW data was the highest ......

European Market Update: Hungary PM tries to calm market jitters over its central bank law and IMF discussions

 06.01.2012 13:17 Friday ***Economic Data***- (EU) ECB: €1.9B borrowed in overnight loan facility vs. €4.8B prior; €455.3B parked in deposit facility (record high) vs. €443.7B prior
- (UK) Dec Halifax House Prices M/M: -0.9% v -0.9% prior; Y/Y: -1.3% v -1.0% prior
- (CZ) Czech Nov Industrial Output Y/Y: 5.4% v 0.5%e; Construction Output Y/Y: -2.3% v -8.0% prior
- (CZ) Czech Nov Trade Balance (CZK): 18.4B v 18.0Be
- (DK) Denmark Nov Unemployment Rate: 4.2% v 4.3%e; Gross Unemployment Rate: 6.2% v 6.3%e
- (HU) Hungary Nov Preliminary Industrial Production M/M: +4.2% v -0.9% prior; Y/Y: 3.5% v 1.5%e
- (HU) Hungary Nov Producer Prices M/M: 2.5% v 1.9% prior; Y/Y: 8.0% v 7.1%e
- (CH) Swiss Dec Foreign Currency Reserves (CHF): 254.2B v 231.6 prior
- (PH) Philippines Dec Foreign Reserves: $75.1B v $76.4B prior
- (CH) Swiss Dec CPI M/M: -0.2% v -0.1%e; Y/Y: -0.7% v -0.6%e
- (CH) Swiss Dec CPI EU Harmonized M/M: +0.3 v -0.4% prior; Y/Y: -0.4% v -0.8% prior
- (UK) Dec New Car Registrations Y/Y: -3.7% v -4.2% prior
- (CZ) Czech Dec International Reserves: $39.9B v $41.3B prior
- (IC) Iceland Dec Preliminary Trade Balance (ISK): 14.5B v 7.9B prior
- (NO) Norway Nov Industrial Production M/M: +1.2 v -1.8% prior; Y/Y: -1.2% v -5.7% prior
- (NO) Norway Nov Manufacturing Production M/M: +0.2 v-0.1%e; Y/Y: 0.4%t v 0.7% prior
- (NO) Norway Nov Retail Sales Volume M/M: 0.1% v 0.3%e; Y/Y: 0.9% v 1.2% prior
- (EU) Euro Zone Dec Business Climate Indicator: -0.31 v -0.48e; Consumer Confidence: -21.1 v -21.2e; Economic Confidence: 93,3 v 93.3e; Industrial Confidence: -7.1 v -7.5e; Services Confidence: -2.1 v -2.1e
- (EU) Euro Zone Nov Retail Sales M/M: -0.8% v -0.4%e; Y/Y: -2.5% v -0.9%e
- (EU) Euro Zone Nov Unemployment Rate: 10.3 % v 10.3%e
- (PO) Portugal Dec Consumer Confidence: -56.8 v -56.0 prior; Economic Climate Indicator: -4.4 v -3.9 prior
- (BE) Belgium Nov Unemployment Rate: 7.2% v 7.3% prior

Fixed Income:
- (IN) India sold total INR140B vs. INR140B indicated in 2018, 2021 and 2032 bonds

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
-France President Sarkozy to meet Italian PM Monti later today amid EU Talks
- ECB's Knot: Euro might collapse if Greece pushed out
- US Non-farm payroll data might present more good news for US but can it dispel concerns over Europe
- Iran said to be preparing for new round of naval exercise

Equities:
FTSE 100 +0.30% at 5641, DAX +0.50% at 6128, CAC-40 +0.80% at 3169, IBEX-35 +0.60% at 8383, FTSE MIB +0.40% at 14,821, SMI flat at 6028

- European shares traded higher despite ongoing concerns over the crisis and rampant rumors over a French sovereign downgrade. Euro cross was hit by debt woes but bourses were resilient ahead of US nonfarm payrolls report which is expected to rise by 150K. Investors are optimistic that the world number one economy is showing signs of strengthening, especially after a strong fourth quarter. Banks shares were higher during the session.

Speakers:
- ECB's Noyer commented that the recent French bond sale was a very good sign and that sovereign bond sales across Europe were going well since the ECB introduced the long-term liquidity operation. He noted that the ECB could massively refinance banks without risks and no doubt of France's capacity to repay its debt obligation. He did not agree that France had effectively lost its AAA sovereign status. The Euro was a strong currency and would continue to exist but the recent decline in Euro was supportive of exports.
- IMF chief Lagarde reiterated the view that 2012 would be challenging and that its global economic forecast was likely to be revised lower (Currently at 4.0%). She noted that the IMF was keen on having all the necessary tools to combat the current crisis and was ready to help all members and not just Europe. Lastly she noted that 2012 would not be the end of the Euro
- Hungary PM Orban commented that the govt and central bank to cooperate in the future and hold daily consultations between them and added that central bank independence was a 'starting point'. The PM reiterated that the Govt would do everything to reach an agreement with IMF and saw a good chance for swift discussions with IMF. Hungary seeks to clarify row with EU Commission on central bank law (Comments after a Hungarian cabinet meeting involving Hungary PM, Central Bank Gov, Econ Min and IMF negotiator Fellegi)
- Greece's second bailout might have to exceed the original expected €130B according sources in "euro-zone circles". According to the article, the exact amount of aid needed by Greece depended on the ongoing private sector involvement (PSI) talks.
- Portugal PM reiterated the view that country woldl achieve 2012 bailout target of 3.0%; to create the conditions necessary for economic growth
- Switzerland's Social Democrats party seek the SNB to raise the EUR/CHF floor from the current 1.20 level
- Czech Central Bank Gov Singer commented that there was no reason to lose confidence in CZK currency
- Hungary Govt official Giro-Szasz stated that the Govt rejected press speculation that it planned to seize bank deposits and added that it would guarantee bank deposits
- Turkey Central Bank Gov Basci commented that the Lira currency would gain and the central bank would support such a move. He noted that the corridor was useful tool for TRY currency management. The recently announced new USD sales were an offensive tool to manage TRY currency and allowed Lira to compete with USD and added that the TRY currency overvalued might become a problem in 2012. The central bank acted strongly to quell lira currency speculation. Interest rates would normalize again once current tightening phase is completed. Turkey's current account was driven by credit growth and not caused by the exchange rate
- India Fin Min Mukherjee reiterated the view that FY12 fiscal deficit might be slightly more than the 4.6% target of GDP
- Japan Finance Ministry Official stated that it purchased €300M of the 3-year EFSF bond issuance held on Jan 5th (equal to approx 10% of the issuance)
- EU govt discussing grace period of up to one year on prospective Iranian oil ban

Currencies:
- The FX market consolidated its recent moves during the session but the greenback saw some late Asian firmness on rumors that North Korean suffered a nuclear incident at one of its facilities (South Korean, Japanese official both downplayed the chatter). The EUR/USD hovered around the 1.28 handle throughout the session. The ECB was again rumored to be again buying peripheral bonds via its SMP program with Italian and Spanish debt mentioned.
- The HUF currency rebounded off its record lows of 325.00 against the Euro as PM Orban spoke to calm investors concerns over the country's financing amid the ratification of the central bank law. The PM pledged to cooperate with the central bank in the future and sought to have swift discussions with the IMF on a precautionary credit line. The EUR/HUF was at 317 as the NY morning approached

Political/ In the Papers:
- The FT Deutschland reported Greece's second bailout might have to exceed the original expectation of €130 billion. According to sources cited in 'euro-zone circles', the exact amount of aid needed by Greece depends on the ongoing private sector involvement or PSI discussion. Note on January 2nd, it was reported that Germany might seek to have Greece's private creditors take larger write downs on their Greek debt holdings. There has also been speculation that Greece could require additional austerity measures.
- So far in 2012, banks have issued at least €10 billion in unsecured senior bonds per FT report. The banks which have issued unsecured debt include Rabobank, Nordea and ABN Amro. In 2011, European banks were having difficulty selling unsecured debt and thus increased their reliance on secured debt and covered bond sales
- Certain hedge funds, believed to be based in the UK, have found ways to circumvent Italy's ban on the short selling of financial stocks. It is suggested that these hedge funds could be helping drive down the stock prices of Italian banks. The story comes as Unicredit has declined more than 30% over the past two trading sessions.
- Following Spain's cabinet meeting yesterday to discuss further austerity, the Spanish region of Catalonia rejected the government imposed budget controls, and accused Madrid of taking over authority of the of the 17 autonomous regions. The Catalan Fin Min Andreu Mas-Colell said that they would consider, as a red line, anything looking like previous line-by-line approval of our budget proposals.
- The Monster Employment Index Europe demonstrates a y/y growth of 11% in December, the slowest rate of growth seen in the Index since mid- 2010. Germany continued to report the strongest growth trend of 32%, followed by 6% growth in UK and 4% in Sweden. Belgium, France, Italy and Netherlands weigh down the Index with negative annual growth.
- In response to US pressure, both Japan and Korea are looking for new crude oil suppliers to lower dependence on Iran. Japan's largest refinery JX Nippon Oil & Energy said it was in discussions with Saudi Arabia and other countries for alternative supplies. In addition South Korea said it would lower imports of Iran crude oil. South Korea's main purchasers of crude, SK Group and Hyundai Oilbank, reported that no instructions were received to switch Iranian supply lines but would do so if ordered by the government.

***Looking Ahead***
- (MX) Mexico Dec Consumer Confidence: 91.7e v 89.5 prior
- (EU) EFSF chief Regling
- 6:00 (PO) Portugal Nov Industrial Sales M/M: No est v -2.5% prior; Y/Y: No est v 2.5% prior
- 6:00 (BR) Brazil Dec IBGE Inflation IPCA M/M: 0.5%e v 0.5% prior; Y/Y: 6.5%e v 6.6% prior
- 6:00 (CL) Chile Dec CPI M/M: 0.1%e v 0.3% prior; Y/Y: 3.9%e v 3.9% prior; CPI Ex Perishables & Fuel M/M: 0.1%e v 0.2% prior
- 6:00 (DE) Germany Nov Factory Orders M/M: -1.6%e v +5.2% prior; Y/Y: -1.3%e v +5.4% prior
- 7:00 (CA) Canada Dec Net Change in Employment: +20.0Ke v -18.6K prior; Unemployment Rate: 7.4%e v 7.4% prior
- 8:30 (US) Dec Change in Nonfarm Payrolls: 150Ke v 120K prior; Change in Private Payrolls: 175Ke v 140K prior; Change in Manufacturing Payrolls: +5Ke v +2K prior
- 8:30 (US) Dec Unemployment Rate: 8.7%e v 8.6% prior; Underemployment Rate: No est v 15.6% prior
- 8:30 (US) Nov Avg Hourly Earning M/M: +0.2%e v -0.1% prior; Avg Weekly Hours: 34.3e v 34.3 prior
- 9:00 (US) Fed's Dudley
- 9:45 (IT) Italy PM Monti
- 10:00 (EU) ECB member Costa
- 10:20 (US) Fed's Rosengren speaks on economy in Connecticut (non-voter)
- 11:00 - (FR) Italy PM Monti meets French President Sarkozy
- 11:00 (EU) ECB Orphanides
- 12:40 (US) Fed's Duke
- 13:00 (US) Fed's Raskin

Asian Market Update: Tense markets react to geopolitical events ahead of US Payrolls

06.01.2012 13:19 Friday ***Economic Data***- (CO) COLOMBIA DEC CPI M/M: 0.4% V 0.3%E; Y/Y: 3.7% V 3.6%E

***Markets Snapshot (as of 04:30GMT)***
- Nikkei225 -0.9%
- S&P/ASX -0.7%
- Kospi -1.6%
- Taiwan Taiex -0.1%
- Singapore Straits Times -0.2%
- Shanghai Composite -0.3%
- Hang Seng -1.4%
- S&P Futures -0.4% at 1,268
- Feb Gold +0.3% at $1,625/oz
- March Crude -0.2% at $101.65

***Overview/Top Headlines***
- Markets were mostly subdued through the session, seemingly not concerned ahead of the US non-farm payrolls and more concerned over the future of Europe. EUR/USD extended its decline below $1.2765, fresh 15-month lows. Gold has resumed its safe haven status testing $1,628, a 2-week high. Near the end of the Asia session a report came across that there was an incident at a North Korea nuclear facility, details were very limited. KRW fell to session lows testing KRW1,155, the yen gained 0.3% against the won and Kospi fell 2% below 1,825. About 30 minutes later officials from Japan and South Korea said they had not heard of any incidents in North Korea.

- China's major oil companies, Sinopec, CNOOC and PetroChina had a boost after China Ministry of Finance raised the threshold on which mainland oil companies will have to pay a windfall tax to $55/barrel from $40. It is expected that this new measure may offset the extra cost brought on by the resource tax in Oct. The govt also took measures to support the banking sector announcing that the CBRC will delay higher capital requirements for big banks until July 1st v Jan 1st prior. The CBRC is calling for capital adequacy ratio of 11.5% and a core ratio of 9.5% v the current capital adequacy ratio requirement of 5-8% depending on the bank.

- Samsung Electronics reported their preliminary Q4 guiding operating profit at KRW5.2T, beating expectations and prior quarter. Sees Rev at KRW47.0T much higher than Q3 and also beating expectations. Both Singapore Air and Qantas confirmed that they had found small cracks in the A30 wing ribs, both said that they did not present a flight risk and they would repair the planes.

***Speakers/Geopolitical/In the press***
- (JP) Japan Fin Min Azumi: EU needs to make efforts to win investors' trust; Would like to see the EU establish a firewall
- (CN) New deposits at China's top 4 banks in December saw an increase of CNY1.25T; New loans were about CNY210B - Chinese press
- (JP) Japan PM Noda: Cabinet will endorse sales tax increase plan
- (EU) ECB's Knot: Crisis of confidence unfolding in Europe; EU aid fund is not large enough, largest hurdle for increasing the EFSF is Germany - Dutch media
- (CN) China Housing Min Weixin: To set up a housing database to track prices and homeownership for 40 cities

***Equities***
- Samsung Electronics, 005930.KR: Reports Prelim Q4 Op profit KRW5.2T (record high) v KRW4.7Te (KRW4.25T q/q) ; Rev KRW47.0T v KRW46.2Te (KRW41.3T q/q)
- Lenovo Group, 992.HK: Preparing a global restructuring plan by reorganizing geographical business units - US financial press
- ASX.AU: Reports Dec capital raised A$9.0B, -45% y/y; 2011 capital raised A$48.6B, -11% y/y
- SNP: Reports 2011 crude output +0.4% y/y; Natural gas output +16.8% y/y
- TM: Targeting to sell more than 1M cars in China in 2012, +10% y/y (+4% y/y in 2011) - Chinese press
- Guangzhou Automobile, 2238.HK: May only make 80-90% of forecasted profit in 2011 - filing

- APOL: Reports Q1 $1.28 (adj) v $1.18e, R$1.18B v $1.2Be; +2.0% afterhours
- AA: TO CLOSE OR CURTAIL 531K METRIC TONS OF SMELTING CAPACITY (12% of total capacity); sees charges of $0.15-0.16 in Q4; -1.7% afterhours
- FDO: Reports Q1 $0.68 v $0.68e, R$2.15B v $2.2Be; -2.9% afterhours

***FX/Fixed Income/Commodities***
- (IN) India Dec tea production 90.3M kilos v 93.9M kilos prior
- (AR) Argentina Agriculture Min Solis: Will eliminate export quotas for wheat, will sell under a new system; Likely to do the same for corn but no decision has been made
- SLV: iShares Silver Trust ETF daily holdings fall to 9,547.0 tons from 9,605.8 tons (lowest level since 9,500 on July, 2011)

Market Week Wrap-up

However S&P's threat to downgrade the sovereign ratings of leading euro zone nations, especially France, continue to cast a long shadow and have curtailed greater risk appetite in the market. Rumors that the S&P downgrades were imminent contributed to equity downdrafts all week. In addition, there were reminders of weakness in Italy and Spain, as yields on the 10-year debt of both nations remained elevated (the Italian yield exited the week above 7%). Italian bank UniCredit was forced to sell new shares at a steep discount to shore up its credit base, driving big declines among European banking names. In addition, there were reports that the Spanish region of Valencia would delay a bond payment. On Friday the US December non-farm payroll report came in at +200K and the private payrolls number was +212K, topping both consensus estimates and the November numbers (+120K and +140K, respectively).

These totals are still not near the levels many analysts say are needed to begin really replacing the jobs lost over the last several years, but the upward trend of new job growth is encouraging. There was a flurry of new developments at the Fed. In the minutes of the Dec 13th FOMC meeting, the Fed disclosed that it would provide a Summary of Economic Projections (SEP) four times a year starting in January. Later the Fed's Bullard said the FOMC is very close to implementing an inflation target. The four recent Fed dissenters rotated off the FOMC (hawks Fisher, Plosser and Kocherlakota, and the dove Evans), to be replaced by a more dovish slate of voters (Pianalto, Lacker, Lockhart and Williams). Chairman Bernanke commented that it would be appropriate to bring foreclosed homes into the rental market to help dampen downward price movements. Note that there were also rumors that the White House was planning a large-scale mortgage refinance plan, which was later denied. Late Friday, however, Freddie Mac announced that the FHFA had directed it to extend forbearance to unemployed borrowers for up to 12 months, which could affect up to 10% of delinquencies on mortgages administered by Freddie. Front-month WTI crude spent most of the week above the $100 handle as the Europeans prepared fresh sanctions against Iran, which held naval exercises in the Strait of Hormuz and generally rattled its scimitar. Brent hit $113. For the week the DJIA gained 1.2%, the NASDAQ rose 2.7%, and the S&P 500 tacked on 1.6%, thanks largely to big gains on the first trading day of the year.

- Another group of companies discloses troubling pre-earnings guidance this week. Barnes & Noble slashed its FY12 outlook to a fairly large loss. The change was due primarily to a shortfall in the expected sales of NOOK ebook readers coupled with more investment in the technology as management lays plans to spin off the NOOK business. Eli Lilly offered a grim look at 2012, warning that both its earnings and revenue totals would disappoint market expectations. Executives further warned about patent expirations on some of the company's largest products, most notably the antipsychotic Zyprexa and the antidepressant Cymbalta. Refiner Tesoro said it would report a big loss in its Q4 and slashed its FY11 outlook. Contributing to the net loss was an extremely weak margin environment in California and the collapse of the WTI-Brent spread. Alcoa announced that it would close or curtail 12% of its total aluminum smelting capacity, with a charge to Q4 earnings of $0.15-0.16. The company also said it would accelerate actions to reduce the escalating cost of raw materials.

- The December same-store sales (SSS) were on the whole better than expected, however promotional discounts ate into profits and many firms lowered guidance for the final quarter of the year. The discount chains TJX and Ross Stores attracted thrifty Christmas shoppers and beat comparable store expectations by wide margins. Meanwhile, the Gap continues to bleed away sales, reporting its sixth straight month of y/y same store sales contraction. Interestingly American Eagle Outfitters, which abandoned providing monthly SSS reports, said its comps were up 12% in the Nov-Dec period. AEO also slashed its Q4 guidance by about 25%, citing promotional activity. Target had a very bad month, with comps dropping to +1.6%, their lowest level since spring. Target also cuts its Q4 guidance, on softer holiday sales. Department stores also generally outperformed expectations, with the notable exception of Kohl's, whose comps were in the red for the second consecutive month.

- US Treasury yields finished the week above where they closed out 2011, but the selling was subdued considering the better US jobs data. The benchmark 10-year yield briefly topped 2% following both the ADP and non-farm payrolls figures, but weakness emanating out of Europe kept an underlying bid in US government paper. Corporate issuance was particularly robust with more than $12B in paper coming to market, for the most active week since last summer. Banks on both sides of the pond were aggressive in their efforts to get out ahead of more than $230B in US corporate debt roll-overs coming due in 2012 (this compares to $195B in 2011). According to data from Barclays, approx €794B of European sovereign bonds will need to be issued in 2012 (above the long-term average, but less than 2010's record €952B in sovereign issuance). The Independent reported that the world's top economies will need to roll over a combined total of $7.6T in 2012, with Japan requiring the most at $3T and the US needing $2.8T.

- Currency traders cannot tear themselves away from the deepening crisis in Europe, where everyone is nervously waiting for the rating agencies to pull the trigger. Absent the looming sovereign downgrades, there was the potential for more risk appetite, in the form of some slightly improved final December manufacturing PMI data in European and Asian nations, plus the good showing in the December US employment data. As the first week of the year rolled on, dealers became keenly aware of a breakdown in the risk on/weak dollar trend -- typically throughout 2011 the dollar was sold on any return of risk appetite, however this correlation appears to be falling apart as investors have bought the greenback on any sign of overall strength.

- EUR/USD began 2012 with an updraft taking the pair back above 1.30, from the 2011 year-end closing level of 1.2970. However, the continued focus on the sovereign situation hammered the euro in the back half of the week, as pessimism and the shifting dynamic with the dollar sent the pair down to 1.2700 level last seen in August of 2010. In a sign of the stress, the ECB deposit facility continued to hit record highs, closing the week with a whopping €455B parked in the facility. With the prospective of weeks and months of further consultations over Europe's new fiscal integration plans ahead even as yields on Spanish and Italian debt remain elevated, there is plenty of pessimism. The Centre for Economic and Business Research (CEBR) began the year by forecasting that the euro would lose a member in 2012. Reports that the Spanish region of Valencia was late in making a bond payment also highlighted these concerns. The EUR/JPY cross continued to hover at 11-year lows, unable to sustain any momentum above the 100 level. The cross tested 98.30 by the end of the week.

- Europe's emerging economies were also in focus this week. In Turkey, the central bank is maneuvering to aid a soft landing for the nation's cooling economy while also warding off the shocks from Europe. The Turkish Central Bank was selling elevated amounts of USD for TRY in order to support the lira throughout the week. After ratifying a new law that weakened its central bank, Hungary's government took heat all week from both markets and European Union officials. In addition, there were growing questions about the nation's ability to finance itself in public markets. This week the forint was testing fresh record lows against the euro, approaching the 325 level on Wednesday, before backing off again. The yield on 10-year Hungarian sovereign paper hit its highest level in two and a half years, testing above 11.20%, while 5-year CDS hit fresh all-time highs above 725bps.

Notable economic data out of Asia was limited to Australia's November trade report, which showed continued deceleration in basic materials shipment activity. Coming in at a 9-month low surplus of A$1.38B, the trade report's components also revealed a 4-month low in exports to China and a 7-month low in the exports of iron ore. The Reserve Bank of Australia is not meeting this month, while fixed income markets are pricing in a slight probability of another cut in February.

Asian Market Update: Markets cautious ahead of meeting between Germany and France; China 2011 yuan loans fail to top 2010

09.01.2012 08:47 Monday ***Economic Data***- (AU) AUSTRALIA NOV RETAIL SALES M/M: 0.0% V 0.4%E (5-month low)
- (CN) CHINA DEC NEW YUAN LOANS (CNY): 640.5B V 575BE (8-month high); 2011 NEW LOANS CNY7.47T V CNY7.95T IN 2010
- (NZ) NEW ZEALAND NOV TRADE BALANCE (NZ$): -308M V -300ME (4th consecutive deficit)
- (CN) CHINA DEC M2 MONEY SUPPLY Y/Y: 13.6% V 12.9%E (5-month high); M1 Y/Y: 7.9% V 7.8% PRIOR
- (KR) SOUTH KOREA DEC PRODUCER PRICE INDEX (PPI) Y/Y: 4.3% V 5.1% PRIOR (15-month low)
- (UK) UK DEC LLOYDS EMPLOYMENT CONFIDENCE: -75 V -75 PRIOR (matches multi-month-low)
- (AU) AUSTRALIA NOV HIA NEW HOME SALES M/M: 6.8% V 2.8% PRIOR (21-month high)
- (AU) AUSTRALIA DEC AIG PERFORMANCE OF CONSTRUCTION INDEX: 41.0 V 39.6 PRIOR (10-month high; 19th consecutive month of contraction)

***Markets Snapshot (as of 04:30GMT)***
- Nikkei225 closed
- S&P/ASX unchanged
- Kospi -1.2%
- Taiwan Taiex -0.7%
- Singapore Straits Times -0.9%
- Shanghai Composite +1.4%
- Hang Seng -0.9%
- S&P Futures -0.4% at 1,269
- Feb Gold -0.5% at $1,609/oz
- March Crude -0.5% at $101.02

***Overview/Top Headlines***
- Markets were very cautious today, after several opened slightly to the upside they quickly fell into negative territory despite stronger US economic data on Friday. Europe's debt crisis continues to weigh on the markets ahead of today's meeting of German Chancellor Merkel and French President Sarkozy. There are several sovereign bond auctions this week in Europe starting with Greece on Monday and Germany on Tuesday, Spain will sell debt maturing in 2015 and 2016 on Thursday, while Italy will auction three-, five- and 15-year bills on Friday.

- The situation in Iran continues to drive Brent prices higher, testing $113.30 as the UK announced it was sending its newest warship to the Gulf in response to Iranian threat to close the Strait of Hormuz. Iran announced that it had replaced the USD with the Russian ruble for some of its oil transactions with Moscow. SocGen analysts look at situation in Iran: Would be relatively easy for Iran to shut down the Straits of Hormuz; but would need to be able to keep it closed for a long period of time to inflict any economic impact on Western countries relying on the oil. "In the event of a shutdown of the Straits of Hormuz, disrupting 15 Mb/d of crude flows, we would expect Brent prices to spike into the $150-200 range for a limited time period. The disruption would definitely result in an IEA strategic release."

- Yen had strong early gains, testing below ¥76.80 and EUR/JPY extended its decline to an 11 year low of ¥97.50. Japan was closed for a holiday and no comments came from officials or the central bank. EUR/USD fell to a 16-month low below $1.2690. A$ lost over 0.5% against the USD after retail sales came in at a 5-month low with a flat reading m/m.

- China reported December new yuan loans of CNY640.5B, this was an 8-month high after the PBoC loosened lending requirements amid slowing economic growth towards the end of the year. However, 2011 new yuan loans were still below 2010 levels. According to analysts, 2012 new yuan loans will rise about 14% from CNY7.47T in 2011. PBoC Gov Zhou said that China may widen Yuan trading band when capital flows become more balanced; Not a good time to liberalize interest rates now. Reiterated will continue implementation of "prudent" monetary policy with some fine-tuning in 2012.

***Speakers/Geopolitical/In the press***
- (CN) Shanghai new home sales -42% w/w; New home prices -17.03% w/w - Uwin
- According to global central bank governors, banks in EU, Japan, and US to be subject to tests for compliance with Basel standards starting in early 2012 0 financial press
- (CN) PBoC to implement a deposit security system, requiring financial institutions to contribute to a fund that would protect customers in case of a bank became insolvent - Chinese press
- (KR) Bank of Korea (BOK) may raise reserve requirement ratio - Korean press
- (HK) According to Centaline Property Agency the secondary market over the weekend saw only 5 home sell v 11 last weekend; Primary market sales remain "brisk" - HK Standard

***Equities***
- SNP: Targeting to double oil output to 50M tons by 2015 v 22.9M tons in 2011 - Chinese press
- BYD, 1211.HK: China Finance Ministry to suspend sales tax on electric vehicles made by domestic automakers BYD and SAIC Motor - China Daily
- Hyundai Motor, 005380.KR: Production suspended at engine factory in South Korea's city of Ulsan after employee set himself on fire in protest of anti-union activity - financial press
- AVM.AU: Minmetals Resources' A$1.2B takeover bid for Anvil will expire on Wednesday, with no acceptance from shareholders expect the largest one Trafigura - Australia Financial Review

***FX/Fixed Income/Commodities***
Supplies of arabica beans are limited due to rain in Colombia and Central America damaging crops; Brazil harvest is months away from being ready - financial press

European Market Update: Euro currency consolidates its recent losses ahead of Merkel-Sarkozy meeting later today

***Economic Data***- (EU) ECB: €1.4B borrowed in overnight loan facility v €1.9B prior; parked in deposit facility (fresh record high) vs. €455.3B prior
- (IT) ECB Dec funding to Italian banks m/m: €210B v €153B prior
- (ZA) South Africa Dec Net Reserves: $47.9Bv $48.6B prior; Gross Reserves: $48.9B v $48.8Be
- (CH) Swiss Dec Unemployment Rate: 3.3% v 3.2%e v 3.1% prior; Unemployment Rate Seasonally Adj: 3.1 v 3.1%e
- (DE) Germany Nov Current Account: €14.3B v €11.0Be; Trade Balance: €16.2B v €12.0Be; Exports M/M:+2.5% v +0.5%e; Imports M/M: -0.4% v +0.5%e
- (FR) France Nov Trade Balance: -€4.4B v -€6.0Be
- (CZ) Czech Dec CPI M/M: 0.4% v 0.5%e; Y/Y: 2,4% v 2.5%e
- (CZ) Czech Dec Unemployment Rate: 8.6% v 8.5%e
- (CZ) Czech Nov Retail Sales Y/Y: +0.5% v -1.0%e
- (DK) Denmark Nov Current Account (DKK): 12.6B v 9.1Be; Trade Balance (ex-shipping): 7.1B v 7.0Be
- (HU) Hungary Nov Preliminary Trade Balance: €666.0M v €790.0Me
- (TU) Turkey Nov Industrial Production WDA M/M: -2.5% v +4.2% prior; Y/Y: 7.2% v 7.4% prior; Industrial Production NSA Y/Y: 8.4% v 10.0%e
- (TW) Taiwan Dec Total Trade Balance: 2.3B v $2.7Be; Total Exports Y/Y: 0.6 v 3.7%e; Total Imports Y/Y: -2.7 v -1.0%e
- (CH) Swiss Nov Real Retail Sales Y/Y: +1.8% v +0.2%e
- (SE) Sweden Nov Service Production M/M: 0.1% v 0.0%e; Y/Y: 2.6% v 2.3%e
- (NO) Norway Nov Credit Indicator Growth Y/Y: 6.6% v 6.8%e
- (SG) Singapore Dec Foreign Reserves: $237.7B v $241.0B prior
- (EU) Euro Zone Jan Sentix Investor Confidence: -21.2 v -24.0 prior
- (GR) Greece Nov Industrial Production Y/Y: -7.8% v -12.3% prior
- (BR) Brazil Dec FGV Inflation IGP-DI: % v -0.2%e v -0.2% prior

Fixed Income:
- (NO) Norway sold NOK6.0B vs. NOK6.0B indicated in 6.5% 2013 Bonds; Yield 1.390%
- (SO) Slovakia Debt Agency (ARDAL) sold €237.1M in 3-month Bills, Avg Yield 1.4313% v 1.8010 prior; bid-to-cover: 2.04x vs. 2.09x prior
- (HU) Hungary Debt Agency (AKK) sold HUF40B vs. HUF40B targeted in 6-Week Bills; Avg Yield 7.77% v 7.34% prior; Bid-to-cover: 3.71x
- (DE) Germany sold €3.9B in 6-month Bubills; avg yield -0.122% v +0.0005% prior; Bid-to-cover: 1.8x v 3.8x prior

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Moody's: Spain Fiscal Slippage In 2011 Is Credit Negative
- Germany Chancellor Merkel to meet French President Sarkozy later today and then INF chief Lagarde on Tuesday

Equities:
FTSE 100 flat at 5648, DAX -0.30% at 6041, CAC-40 +0.10% at 3141, IBEX 35 +0.90% at 8365, FTSE MIB flat at 14,652, SMI -0.10% at 6007

- European shares edged higher ahead of the Merkozy meeting today in Berlin. The two leaders are expected to discuss the future of the Eurozone and markets are up with optimism that the leaders will pave the way to a solution and prepare for next summit of January 30th.
- Individual shares traded mixed during the session. Unicredit [UCG.IT] fell in the red before the shares were halted and resumed trading again, lower by 7% as investors are monitoring and trading bank's capital increase. Glaxosmithkline [GSK.UK] also traded lower after reporting mixed clinical results for its Relovair asthma drug. BMW [BMW.DE] rose after reporting record high vehicle sales for 2011.

Speakers:
- IMF Chief Lagarde commented that Europe might avoid recession in 2012 as she saw reasons to be more upbeat about the region's prospects
- China Vice Commerce Minister Zhong Shan reiterated that China faced a more difficult trading environment in 2012 but would maintain trade policies. China would implement targeted measures to maintain trade with the US and Japan, while expanding the share of exports to emerging markets
- China Xinhua commentary piece stated that the European common currency would not collapse despite the current situation
- German Fin Min Schauble urged faster progress was needed for Greece in its negotiations with the IMF
- Czech Central Bank Gov Singer commented that Greece should quit the euro-zone and devalue its new currency unless Europe was willing to give "massive" funding to the country
- Italy PM Monti reiterated that there would be no new austerity plan, that the measures already announced were enough
to guarantee the country will reach its economic targets
- Investor George Soros commented that Europe was in a more serious situation at this time compare to the 2008 crisis
- Spain's Budget Min was said to be planning to meet with regional governments this week regarding the deficits of the regions.
- Swiss Government Official commented that Switzerland Unemployment Rate would rise to 3.9% by end of 2012 compared to the 3.3% rate registered in December
- EU Steel Industry Association (EUROFER) was said to have filed anti-subsidy complaint regarding Chinese steel products
- EU Commission commented that Hungary needed to recover HUF64B in illegal state aid paid to Malev Airlines for the 2007-10 period
- UAE Oil Min commented that oil prices between $85-95 was good for country's investments and noted that the IPIC pipeline bypassing the Strait of Hormuz seen operational within six months with capacity between 1.5-1.8M bpd
- Philippines Central Bank Gov Tetangco commented that he saw monetary easing in Q1 2012 period (Move would follow two hikes in 2011). The governor was confident of manageable inflation in the coming months and would continue to monitor negative developments overseas and its possible impact on domestic prices
- EU plans to sell bonds through the EFSM; guidance seen 130-140bps over mid-swaps

Currencies:
- Bearish sentiment for the Euro seemed a bit overdone ahead of the key Merkel-Sarkozy meeting later today. The most recent CFTC data showed that euro short positions hit record highs as the EUR/USD hit 16 month lows while EUR/JPY was at 12-year lows. The session saw a mild reprieve for the Euro. The pair tested 1.2785 as the NY morning approached
- Overall the USD was a touch weaker against the major pairs in a move regarded as consolidation following the gains after the US payroll data release last week.

Political/ In the Papers:
- According to a survey of 14 bank economists, Germany is already in recession. There are expectations the economy contracted in the fourth quarter, and that the pace of the contraction may speed up in the first quarter. Germany is due to issue 2011 GDP data on Wednesday.
- Data from the Confederation of British Industry (CBI) indicated that fourth quarter business volumes in the UK financial sector grew at its fastest pace since 2007. The industry was supported by higher equity prices and bond market transactions. CBI added that it has concerns about the 2012 outlook for financial services due to the EU debt crisis.
- Britain's PM Cameron was said to have moved away from plans to remove the 50% income tax rate until at least 2015. The Telegraph noted that the decision to cancel the planned elimination of the tax rate comes amid political hurdles and rising tax revenues attributed to the tax rate. UK Chancellor Osborne is expected to disclose in the March Budget that a decision to maintain the top tax rate until 2015 remains under review.
- The Irish Independent reported that Ireland Q4 house prices are down 8%, and down 18% for the 2011. According to Daft.ie, for 2011 prices dropped 18%. House prices are down over 50% from the boom of 2007, with suggestion that an additional 15-20% fall may be possible based on the theory that a home is worth 15 times what somebody would pay for it in rent over a year.
- German Social Democrats have indicated that they will work with Chancellor Angela Merkel to find a consensus candidate for the German presidency. As a reminder, President Wulff is facing calls to resign for allegedly taking a low-interest loan arranged by the wife of a businessman during his tenure as minister president in the state of Lower Saxony.
- Greek bondholders were reported to be prepared to accept higher losses, as negotiations are to continue this week.

***Looking Ahead***
- (EU) EU to price 30-year bonds (guidance was around 130bps over mid-swaps)
- 6:00 (FR) France PM Fillon makes New Year's vows in Paris
- 6:00 (DE) Germany Nov Industrial Production M/M: -0.5%e v +0.8% prior; Y/Y: 4.0%e v 4.1% prior
- 6:00 (PT) Portugal Nov Trade Balance: No est -€932M prior
- 6:00 (ZA) South Africa Electricity Consumption Y/Y: No est v -0.8% prior; Electricity Production Y/Y: No est v -1.4% prior
- 6:00 (IS) Israel to sell 2014, 2016, 2022 and 2042 Bonds
- 6:00 (PL) Poland to sell up to PLN2.0B in 12-month Bills
- 6:30 (CL) Chile Dec Trade Balance: $750.0Me v $657.0M prior;
- 6:30 (CL) Chile Dec Copper Exports: No est v $3.7B prior
- 7:30 (DE) German Chancellor Merkel and France President Sarkozy hold Talks in Berlin
- 7:45 (EU) EU President Van Rompuy
- 8:30 (CA) Canada Nov Building Permits M/M: -3.0%e v +11.9% prior
- 9:00 (MX) Mexico Dec Consumer Prices M/M: No est v 1.1% prior; Y/Y: No est v 3.5% prior; CPI Core M/M: No est v 0.3% prior
- 9:00 (FR) France Debt Agency to sell up to €7.7B in 3-month, 6-month and 12-month Bills
- 9:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 9:30 (EU) ECB announces weekly settlements in its Govt Bond Buying Program (SMP)
- 9:45 (UK) BOE to buy £1.7B in 2015-2020 Gilts in reverse auction
- 10:00 (HU) Hungary Dec YTD Budget Balance (HUF): No est v -1.248T
- 10:30 (CA) Canada Q4 Business Outlook Future Sales: 10.0e v 6.0 prior; BoC Senior Loan Officer Survey: No est v -26.9 prior
- 10:30 (DE) German Chancellor Merkel holds Speech on demographics at Cologne Congress
- 11:30 (US) Treasury to sell $29B in 3-Month and $27B in 6-Month Bills
- 12:00 (EU) EU Parliament's Buzek speaks at Press Club Brussels
- 12:30 (DE) German Chancellor Merkel attends IHK Chamber of Commerce Event in Dusseldorf
- 12:40 (US) Fed's Lockhart to speak on economy in Atlanta
- 15:00 (US) Nov Consumer Credit: $7.0Be v $7.7B prior

Asian Market Update: Equities rally, USD weakens with some risk appetite returning

***Economic Data***- (CN) CHINA DEC TRADE BALANCE: $16.5B V $8.8BE
- (AU) AUSTRALIA NOV BUILDING APPROVALS M/M: 8.4% V 6.0%E (3-month high); Y/Y: -18.9% V -19.8%E
- (UK) UK DEC RICS HOUSE PRICE BALANCE: -16% V -19%E (17-month high)
- (UK) UK DEC BRC SALES LFL Y/Y: 2.2% V 0.4%E (8-month high)
- (NZ) NEW ZEALAND DEC QV HOUSE PRICES Y/Y: 2.4% V 1.7% PRIOR (15-month high)
- (NZ) NEW ZEALAND NOV BUILDING PERMITS M/M: -6.4% V +3.3%E
- (PH) PHILIPPINES NOV TOTAL EXPORTS: -19.4% V -10.0%E; TOTAL MONTHLY EXPORTS: $3.3B V $4.1B PRIOR
- (MA) MALAYSIA NOV INDUSTRIAL PRODUCTION Y/Y: 1.8% V 3.5%E; MANUFACTURING SALES VALUE Y/Y: 6.3% V 11.8% PRIOR
- (JP) Japan investors sell ¥155B in foreign bonds last week v ¥146B bought in prior week

***Markets Snapshot (as of 05:00GMT)***
- Nikkei225 +0.4%
- S&P/ASX +1.2%
- Kospi +1.7%
- Taiwan Taiex +1.2%
- Singapore Straits Times +0.8%
- Shanghai Composite +1.6%
- Hang Seng +0.6%
- S&P Futures +0.5% at 1,281
- Feb Gold +0.6% at $1,617/oz
- March Crude +0.5% at $101.78

***Overview/Top Headlines***
- Markets were buoyant today, with Alcoa kicking off the US earnings which helped to boost Australian miners. The Kospi rose supported by electronic and tech names. EUR/USD leveled off around $1.2780, coming off its 16-month low. China Securities Regulatory Commission (CSRC) said it would "actively" push pension and housing funds to invest in capital markets; To encourage long-term investors such as insurers and corporate pension plans to buy more shares.

- China's softer import data in the December trade balance (also a multi-month low) at 11.8% v 18.0%e v 22.1% prior supported the popular belief that the RRR would be cut before the Lunar New Year holiday. With Europe still a big question mark and the crisis reducing external demand, China will need to find ways to boost its trade, since its largest destination, Europe, is such an uncertainty. This fed the Shanghai Composite's rise to 2,284 since it is now even more likely that the PBoC will have to take action. December headline trade balance was nearly double analyst estimates at $16.5B v $8.8Be. Exports were in line at 13.4%. 2011 Trade Balance $155.1B v $183B y/y, this was in line with Chinese government official comments in the past.

- Australia November building approvals hit a 3-month high at 8.4% ahead of the 6%e, y/y also was better than expected -18.9%. AUD/USD extended its gains to session highs above $1.0270 it then went on to test $1.0320 on China's trade balance data. NZD/USD followed suit testing 2-month highs above $0.7940

- PBoC Gov Zhou quoted in the Chinese press said that more downside pressure on the economy will require China's policymakers to use a wider range of tools to maintain a prudent monetary policy this year. The government needs to prepare not only quantitative measures, pricing tools, but also other "innovative prudent tools," in a bid to meet the current challenges.

***Speakers/Geopolitical/In the press***
- (CN) HSBC's Qu expects 3 Reserve Ratio Requirement (RRR) rate cuts over 6-months
- (PH) Philippines Central Bank Gov Tetangco: Reiterates the central bank has room for policy easing
- (KR) According to Bank of Korea (BOK) review, benchmark rates will have to raise to 6% from current 3.25% in order to lower CPI to 3% - Korean press
- (CN) CSRC chairman Guo Shuqing: China may introduce sovereign bond as well as commodity futures - financial press

***Equities***
- TSM: Reports Dec Rev NT$30.6B v NT$35.2B m/m v NT$33.8B y/y
- JSTL.IN: Will buy Q4 coking coal at $230/ton v $290/ton in Q3; Do not expect steel prices to fall in the short term
- Nikon, 7731.JP: Resuming some of the suspended production in Thailand - financial press
- Kia Motors, 000270.KR: Exec: Expects US sales to grow in 2012 despite the absence of new model launches; Aims to surpass 500K vehicles in sales
- Longfor Properties, 960.HK: Reports Dec contracted sales CNY2.65B, -52.6% y/y; 2011 contracted sales CNY38.3B v CNY40B target, +14.8% y/y
- PBG.AU: Entered preliminary talks with KKR after unsolicited approach

***US Equities***
- LIZ: Affirms FY11 pro-forma adj EBITDA at the low end of $80-90M; Cuts 2012 adj EBITDA $125-140M from $130-150M prior; CFO resigns; -12.9% after hours
- JNPR: Lowers Q4 guidance to $0.26-0.28 v $0.34e, R$1.11-1.12B v $1.2Be (guided $0.32-0.36; R $1.16-1.22B prior); -2.1% after hours
- WDFC: Reports Q1 $0.42 v $0.54e, R $84.9M v $86Me; -8.1% after hours
- OCZ: Reports Q3 $0.06 v $0.06e, R$103.1M v $100Me; -3.6% after hours
- AA: Reports Q4 -$0.03 v -$0.03e, R $5.99B v $5.7Be; +0.8% after hours

***FX/Fixed Income/Commodities***
- EUR/JPY: (JP) BoJ supplied $12.6B in 3-month US dollar funding operation (highest amount since 2010)
- (AU) Newcastle Coal Exports -11.7% to 2.36M tons in week ended Jan 9th
- According to Goldman the rubber market is expected to have the largest glut since 2004 which will cut costs for tire makers - financial press
- (VE) Venezuela Oil Min: OPEC will not get involved with any dispute with Iran; OPEC has not planned an extraordinary meeting at this time
- (KR) South Korea Finance Ministry: Will increase food supply to meet demand and control inflation ahead of Lunar New Year

European Market Update: Fitch noted that France seen holding onto AAA rating for this year aids risk appetite; Euro nations sovereign review likely to be resolved by end of January

Asian Market Update: Quiet session ahead of Bund auction; China assures its banks are well positioned

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Najnowsze European Market Update: Germany moving closer to a technical recessionKBC: While Hungary’s delegation meets the IMF, the government is ready to change legislationDAILY FOREX AND DOW JONES RECOMMENDED LEVELSUS Market Update: Dow +98 S&P +13 NASDAQ +29European Market Update: Fitch noted that France seen holding onto AAA rating for this year aids risk appetite; Euro nations sovereign review likely to be resolved by end of JanuaryKBC: Hungary’s budget deficit probably below 3% of GDP in 2011DAILY FOREX AND DOW JONES RECOMMENDED LEVELS Najpopularniejsze World-Signals.com: Negative US fundamental data moved EUR/USD with 80 pips.Forex linksEnergy Market PreviewForex hedge fund managementKBC: Higher US PPI extends negative correction in the regionFXCM: Yen Recovers; Euro Marks TimeKBC: CE currencies weaken on global equity sell offNasdaq (qqqq), still working to perfection.... Navigator FXtraders.eu » Article Articles menu Print Print directly Print preview Add to bookmarks Tell a friend Adjust font Enlarge Decrease Article content 11.01.2012 08:40 Wednesday ***Economic Data***
- (JP) JAPAN DEC OFFICIAL RESERVE ASSETS: $1.3T V $1.3T PRIOR
- (KR) SOUTH KOREA DEC UNEMPLOYMENT RATE: 3.1% V 3.2%E
- (JP) JAPAN NOV PRELIMINARY LEADING INDEX CI: 92.9 V 92.9E; COINCIDENT INDEX CI: 90.3 V 90.3E
- (MA) MALAYSIA NOV TRADE BALANCE (MYR): 9.5B V 11.9BE; Exports y/y: 8.0% v 12.9%e, Imports y/y: 8.4% v 9.4%e
- (JP) JAPAN NOV CONFERENCE BOARD LEADING ECONOMIC INDEX: -0.2% V +1.2% PRIOR
- (UK) UK DEC BRC SHOP PRICE INDEX Y/Y: 1.7% V 2.0% PRIOR (16-month low)
- (LK) SRI LANKA CENTRAL BANK LEAVES REPURCHASE RATE UNCHANGED AT 7.00%, AS EXPECTED
- (AU) Australia Nov-end Job Vacancies: -3.3% v 3.2% prior
- (NZ) New Zealand Q4 Westpac Employment Confidence Index: 99.6 v 104.2 prior
- (CN) China State Administration of Foreign Exchange (SAFE): Lowers Q3 Current Account surplus to $53.4B vs $57.8B prior

***Markets Snapshot (as of 05:00GMT)***
- Nikkei225 +0.2%
- S&P/ASX +0.8%
- Kospi -0.4%
- Taiwan Taiex +0.3%
- Singapore Straits Times +0.3%
- Shanghai Composite -0.5%
- Hang Seng +0.1%
- S&P Futures -0.2% at 1,283
- Feb Gold +0.4% at $1,637/oz
- March Crude -0.4% at $101.84

***Overview/Top Headlines***
- Markets were mixed, with no major driver for the session. Republican Presidential candidate Mitt Romney won the New Hampshire primary, as expected. Australia job vacancies declined 3.3% after rising nearly the same in the last month. South Korea saw its December unemployment rate hold steady. Commenting ahead of his first meeting in China, US Treasury Sec Geithner said that the main focus of the talks would be on growth, including growing US exports to China. China Vice Premier ahead of the talks indicated that China was willing to increase its trade with the US.

- EUR/USD traded with a bearish tone for the session ahead of the 5-year Bund auction later today and France's meeting with the IMF's Lagarde. USD/JPY was in a tight range for the session trading to the upside. AUD was weaker as many of the major miners were forced to close operations in Western Australia due to cyclone Heidi.

- PBoC Head of Research expects that the global financial crisis will last for another 2-3 years, saying that China banks may face challenges if rate policy is liberalized. PBoC's Zhang affirmed that Chinese banks are in good shape with low non-performing loan ratios; 2012 CPI may remain at 4%, may not decline quickly. PBoC Advisor Li commented to the press that any help for Europe should be linked to IMF quota reform. EU debt crisis will have a short term impact on China's economic because of steps taken to reduce reliance on external demand.

***Speakers/Geopolitical/In the press***
- (AU) Australia Foreign Min Rudd: If Australia does not invest in Indonesia it runs the risk of missing a Brazil scale economic opportunity - The Australian
- (CN) China Academy of Social Sciences (CASS) researcher Fan Mingtai: Local debt problem will not be solved in the next 2-3 years; Looser policy needed to ease pressure on local govts - China Daily
- (HK) Hong Kong banks increasingly concerned over borrowers' ability to make mortgage payments - SCMP
- (CN) China top 4 banks total yuan loans in the first week of Jan exceeded CNY50B v CNY130B estimated for entire Dec
- (CN) According to Goldman Sachs, PBoC may start to cut key 1-year rates starting in H2 of 2012 - financial press

***Equities***
- Kirin Holdings, 2503.JP: Reports 2011 beer sales 160.3M v 165.9M target, -5.7% y/y; Guides 2012 beer sales at 163.5M cases
- CHT: Reports Dec Net NT$2.2B, Rev NT$16.4B
- Hon Hai Precision, 2317.TW: Reports Dec Rev NT$316.9B, +3.2% m/m and 29.5% y/y
- BXB.AU: Received offer of A$2.2B for paper unit, Recall - financial press
- Shimao Property, 813.HK: Expects Beijing to lift some of the property purchase restrictions imposed in 2011 in mid-2012 - SCMP

***US Equities***
- SMCI: Cuts Q2 guidance $0.24-0.25 v $0.29e; Rev $249-250M v $272Me (previously guided EPS $0.27-0.32; Rev $260-280M on Oct 25th); -5.9% after hours
- DLA: Lowers FY12 guidance due to record high cotton prices; Guides Q2 -$1.62 to -$1.58 v $0.02e; Guides FY12 $0.50-0.60 v $2.05e, R$480-500M v $515Me (guided $2.00-2.15, R$500-520M prior); -22.4% after hours
- SYK: Reports prelim Q4 R$2.2B v $2.23Be; FY11 $3.72-3.74 v $3.73e; R$8.3B v $8.3Be; Guides initial FY12 EPS growing double digits over 2011 (implies at least $4.09 v $4.11e); +1% after hours
- CWTR: Guides Q4 -$0.24 to -$0.18 v -$0.17e (-$0.21 to -$0.13 prior guidance); -5.8% after hours
- CROX: Guides FY11 Rev to exceed $1B v $1.0Be; guides Q4 Rev to high end of prior $200-205M v $204Me; +5.6% after hours

***FX/Fixed Income/Commodities***
- (US) API PETROLEUM INVENTORIES CRUDE: +400K V +1ME; GASOLINE: +1.89M V +2ME; DISTILLATE: +850K V +2ME; UTILIZATION: 84.8% V 83.7% W/W
- (CN) China MoF sells 1-yr bills at 2.78% v 3.90% on Sept 13th
- PKX: According to Korea Iron and Steel Association (KOSA), exports of steel from South Korea in 2011 reached a record high at 28.5M tons, +9.3% y/y - Korean press

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