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Japan: LDP & New Komeito agree to form coalition government and to target 2% inflation
Japan Data: November Corporate Services Price Index, -0.4% Y/Y
As I helped cap the EUR/USD market earlier, I might as well try and put a bottom in it……
Dec. 25 – Tokyo is open today
CITIC Trust Co. delays interest payment
Quiet and quieter
US stocks limp into Christmas
No chance for risk trades until fiscal cliff sorted out
US dollar gaining as stocks extend slide
Speculators now neutral of euros
Officials use Christmas Eve to bury reports on the real cause of Greek crisis
USD/JPY testing the cycle highs
EUR/USD extends rally in holiday-thinned markets
Merry Christmas to all our readers!!
I like this one…..

Japan: LDP & New Komeito agree to form coalition government and to target 2% inflation

Posted: 24 Dec 2012 09:19 PM PST

The LDP and new Komeito have formally agreed to form a coalition government
Both agree on a 2% inflation target
Also agree to target 3% nominal growth, deregulation on the agenda to help achieve this
The Coalition partners are compiling a large-scale extra budget for the current year to help stimulate the economy
The Coalition partners have not discussed revision to the BOJ law, but would do so if needed

Headlines via Kyodo News, Reuters, and Bloomberg

Japan Data: November Corporate Services Price Index, -0.4% Y/Y

Posted: 24 Dec 2012 03:50 PM PST

November Corporate Services Price Index, -0.4% Y/Y

Prior result was -0.7% Y/Y
Market expectation was for -0.6% Y/Y

USD/JPY has been as high as 84.96 this morning (just after 2200GMT) and down to 84.76 since.

Have a great day all!

As I helped cap the EUR/USD market earlier, I might as well try and put a bottom in it……

Posted: 24 Dec 2012 02:02 PM PST

At least until I get back on Thursday….

We topped out at 1.3233 after I told you sell orders were lined up at 1.3235/50.

So on the downside, I heard earlier buy orders lined up at 1.3150/70.

Talk was of sell stops gathering through both 1.3150 and 1.3140, take your pick.

Dec. 25 – Tokyo is open today

Posted: 24 Dec 2012 01:13 PM PST

Just a reminder – the Tokyo market is open for business today.

There is one piece of economic data due to be released in Japan today, due at 2350GMT. Its not a very high priority market focus:

November Corporate Services Price Index, Y/Y

Prior result was -0.7% Y/Y
Market expectation is for -0.6% Y/Y

CITIC Trust Co. delays interest payment

Posted: 24 Dec 2012 01:12 PM PST

An arm of financial conglomerate China Citic Group said it won’t make an interest payment on time to investors because one of its debtors missed a payment, in the latest example of the potential risks within China’s massive but poorly regulated informal lending system.
Citic Trust Co. said in a statement late Friday that it missed an interest payment due Dec. 20 to investors in one of its one trust products. It didn’t disclose the size of the payment.

This could be a source of jitters for the markets. It does seem to be a one-off (China bears, feel free to chime in here ); and note this:

The investment product is allowed to delay interest payments for three months, according to its prospectus, so it could still meet its obligations.

Delayed Payment Puts Spotlight on China’s Trust Companies (Gated WSJ article. A news search on the headline may turn something up).

Quiet and quieter

Posted: 24 Dec 2012 11:13 AM PST

The movement has stopped with sterling, aussie and yen as the losers on the day.

US stocks limp into Christmas

Posted: 24 Dec 2012 10:04 AM PST

The S&P 500 closed down 0.25% to 1427.

The fiscal cliff is getting all the blame.

No chance for risk trades until fiscal cliff sorted out

Posted: 24 Dec 2012 08:37 AM PST

Given the choice between the fiscal cliff and a seasick crocodile…

US dollar gaining as stocks extend slide

Posted: 24 Dec 2012 08:26 AM PST

The S&P 500 is at the lows of the day in a shortened session that ends at 1 pm ET( 1800 GMT).

Cable is now down more than 80 pips from midway though European trading. The moves today are surprisingly large, given the lack of newsflow.

Continued worries about the fiscal cliff could make the week ahead unusually volatile for this time of year.

Speculators now neutral of euros

Posted: 24 Dec 2012 08:06 AM PST

The weekly CFTC speculative futures positioning data showed relatively small changes in most currencies. One exception was the euro, which fell to a net -9.7K from -31.6K. It shows that the long-term euro bears have given up. You could argue they are paring back positions ahead of year-end but, historically, that doesn’t happen.

Officials use Christmas Eve to bury reports on the real cause of Greek crisis

Posted: 24 Dec 2012 07:13 AM PST

Greece has pillaged pensions and driven down wages but done nearly nothing to reverse endemic tax evasion at the heart of its crisis.

I have often mused that troika officials are so quiet on this issue that they’re almost complicit.

It seems as though some staffers in Athens, at the EU and the IMF have been writing reports on the issue. Instead of touting the reports, the leaders decided to leak them on Christmas Eve when they will be ignored and forgotten.

More focus is needed on collection from the 1,500 biggest debtors, which make up two-thirds of the total amount owed to the state, according to an e-mailed copy of the November report from the Athens-based finance ministry today.

A separate EU/IMF report says Greece should give up collecting about 80% of 53-billion euros in taxes owed, was also released today. It says it would be too hard to track the money down.

USD/JPY testing the cycle highs

Posted: 24 Dec 2012 06:24 AM PST

The market isn’t as quiet as you might expect today.

USD/JPY is testing last week’s high, which represents the highest since April 2011. The underlying bid in the US dollar could be related to 1) year-end flows 2) weakness in US stocks 3) worries about the fiscal cliff but none of it adds up.

Expect to see some buy stops if 84.61 breaks.

EUR/USD extends rally in holiday-thinned markets

Posted: 24 Dec 2012 03:38 AM PST

We’ve made it as high as 1.3233, presently at 1.3227.

Talk of some sell orders clustered 1.3235/50, buy stops through 1.3255.

I’m always a little wary of flow info this time of year. Earlier was getting reports of sell orders down at 1.3200 and more at 1.3220 which I didn’t pass on. Just as well as they didn’t offer much resistance when all said and done.

If you’re trading at this late stage, can I suggest you be relatively conservative. Just sayin