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• 2% Inflation… Starbucks shows the BOJ how its done.
• Yuan: Next band widening?
• ForexeLive US wrap: Closer to the cliff
• Rumor Obama to offer a scaled-back fiscal cliff deal
• I’m into the schnaps; AUD is into the stops
• IMF: French growth outlook fragile
• AUD making a run for stops below the 100-day average
• Senate majority leader Reid: Boehner’s Plan B was ‘no plan at all’
• C’mon everyone, let’s singalong……..
• Why the world economy needs America to avoid the fiscal cliff
• Wow, what happened to cable…….
• Italy’s lower house approves budget
• EUR/USD takes a fresh leg lower
• Monti: Italy’s credibility abroad key for economic growth
• Obama to name JFK secretary of state
• Mr. Market feels better after Boehner
• Boehner: Tax rates go up on everyone without action
• Monti wins confidence vote ahead of budget vote
• Stocks open weak but not weakening further
• Good data gone bad

2% Inflation… Starbucks shows the BOJ how its done. Posted: 21 Dec 2012 07:58 PM PST Starbucks in Japan has reduced the amount of drip coffee it pours into a cup by 9mm (about 0.35 inch). A short drip coffee is now filled to 15mm below the top, whereas previously the surface of the coffee was 6mm below the rim. The price isn’t any lower, though. Wonder if that equates to 2% inflation? Gotta be close, right? Starbucks Japan Customers Find Less Coffee in Their Cups

Yuan: Next band widening? Posted: 21 Dec 2012 06:56 PM PST Some background reading for the weekend. China will increase the movement of the yuan's exchange rate "appropriately" to handle the latest rounds of quantitative easing by the world's central banks, the official Xinhua News Agency said in an editorial. Bloomberg article: China Plans Making Yuan More Flexible After Global Easing

ForexeLive US wrap: Closer to the cliff Posted: 21 Dec 2012 01:00 PM PST Mayan apocalypse: Not so much  US personal income rises 0.6%, spending up 0.4% US durable goods orders rise 0.7%; core orders jump 2.7% Van Rompuy: Huge progress made in stabilizing euro zone Spiegel: Schaeuble preparing a tax hike for Germany Italian House of Deputies passes 2013 budget; Monti resigns, as expected White House and Boehner remain at odds over fiscal cliff; House to return on December 27 Moderate risk aversion was the theme on Friday ahead of the long Christmas week and year-end. We’re no closer to a deal on the fiscal cliff but both sides remain open to negotiations… EUR/USD slipped through important support at 1.3180 but closes very close to that level, sending mixed signals. A sustained move below 1.3180 signals a top is in place in the near-term. AUD took a spanking today, as did GBP. Markets got one sided and AUD fell through its 100.day moving average at 1.0404 and fell as low as 1.0395. Cable slipped back to 1.6160 from above 1.6300 earlier in the week. USD/JPY ends at 84.25 despite risk aversion in other markets and lower US bond yields (10s down 4 bp to 1.76%)

Rumor Obama to offer a scaled-back fiscal cliff deal Posted: 21 Dec 2012 12:59 PM PST Sounds plausible. Kick the can into 2013  and fight it out then…That’s been my base-case throughout. Surprised it took them this long…

I’m into the schnaps; AUD is into the stops Posted: 21 Dec 2012 12:17 PM PST Not a very merry Christmas for Aussie. It’s being clubbed like a baby seal late this pre-holiday Friday. Stops galore where just hit on the move through the 100-day average at 1.0404 and below 1.0400. We’ve dippd to 1.0395 thus far.

IMF: French growth outlook fragile Posted: 21 Dec 2012 12:05 PM PST Growth relects weak European conditions French budget deficit seen at 3.5% of GDP in 2013. I thought “fragile” was an Italian word.

AUD making a run for stops below the 100-day average Posted: 21 Dec 2012 11:05 AM PST The low so far is 1.0407 with the average at 1.0404. Stops are just below 1.0400. Suddenly a dull afternoon got a lot more interesting.

Senate majority leader Reid: Boehner’s Plan B was ‘no plan at all’ Posted: 21 Dec 2012 10:09 AM PST Boehner wasted a week on ‘futile political stunt’ Fiscal cliff solution must be bi-partisan Democrats are ready to return to negotiations ‘There’s still time’ for Boehner to stop fiscal cliff $250k tax cut level would pass House House minority leader Pelosi: There’s still a chance to reach balanced agreement ‘Let’s go back to the negotiating table’

C’mon everyone, let’s singalong…….. Posted: 21 Dec 2012 09:36 AM PST

Why the world economy needs America to avoid the fiscal cliff Posted: 21 Dec 2012 09:10 AM PST Is that Boehner a giant, or is the guy on the left just real small

Wow, what happened to cable……. Posted: 21 Dec 2012 08:55 AM PST Yes it’s your lucky day, I’m covering the product for the next hour or so as Jamie runs off to do an errand. Well ‘covering’ might be putting it a little strongly. EUR/GBP retains a bid tone, presently at .8145.  There’s been much talk past couple of days that a European sovereign has been periodically buying this cross for month-end purposes via a German commercial bank conduit. On the flip side, in recent sessions I’ve been getting reports of sell orders lined up at .8160/70. Said to be buy stops just above there.

Italy’s lower house approves budget Posted: 21 Dec 2012 08:41 AM PST And there was much rejoicing. Expect Monti to hand in his resignation at any time.

EUR/USD takes a fresh leg lower Posted: 21 Dec 2012 08:40 AM PST With equities leading the way lower. A sustained break of the 1.3165/80 area will signal a near-term top is in place.

Monti: Italy’s credibility abroad key for economic growth Posted: 21 Dec 2012 08:29 AM PST Presumably owing to bond spreads… Euro area economic situation has improved greatly Credibility abroad linked budget rigor

Obama to name JFK secretary of state Posted: 21 Dec 2012 07:38 AM PST The emptiest of empty suits will become the US’s top diplomat. At least Kerry’s move to the State Department will open his Senate seat for squishy Republican Scott Brown to contest in a special election.

Mr. Market feels better after Boehner Posted: 21 Dec 2012 07:17 AM PST Markets continue to bet a deal is gonna get done. I’m less sure, but you have to listen to the market. Equities are well off their lows, now down less than 1%. EUR/JPY bouncing as well.

Boehner: Tax rates go up on everyone without action Posted: 21 Dec 2012 07:01 AM PST Bill passed to replace sequester passed bill to freeze rate hikes President’s proposal doesn’t do anything to cut spending, reform entitlements Trying to bridge differences difficult Obama and Congressional leaders need to work together to solve problem Not going to address spending problem by kicking the can down the road Not getting the votes for Plan B not a reflection on his leadership (Yes. Yes it is…) Not concerned about losing position

Monti wins confidence vote ahead of budget vote Posted: 21 Dec 2012 06:42 AM PST Vote in favor of the budget later today a formality. Monti will resign after the vote and new elections will take place in the last week of February, in all likelihood. EUR/USD is triggering stops in the low 1.3170s despite the “good” news.

Stocks open weak but not weakening further Posted: 21 Dec 2012 06:40 AM PST Equities are off their worst levels of the opening phase of the cash markets, The S&P is down 1.1% at writing having traded as much as 1.3% lower in the opening moments. Stocks will be the risk barometer today. Speaker Boehner is scheduled to speak at 10 am Washington time or 15:00 GMT.

Good data gone bad Posted: 21 Dec 2012 06:23 AM PST Doesn’t matter that we’ve has two days of stunningly strong US economic data. The fiscal apocalypse is taking center stage and it is weighing on risk sentiment at long last. The market has been complacently waiting for a deal to get stitched together but if is looking less likely by the hour. Bloomberg just flashed )again) that Monti will resign today after the Italian budget vote. No shite… EUR/USD stops are eyed in the 1.3165/70 area, traders report.

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