Your forexlive.com ENewsletter

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• No “burasagari” for Abe in order to gaffes at bay
• European economy still shrinking
• ForexLive North American wrap: No deal or no deal
• S&P 500 down 1.1%
• Obama not making new fiscal cliff offer – RTRS
• Monti building centrist coalition
• EUR/JPY is the top performer on the week
• Don`t hold your breath on White House meeting
• Eurogeddon averted or delayed
• Losses for European stocks
• Chatter about progress on fiscal cliff mini-deal
• Papaconstantinou tossed from party
• Housing pushed to the backburner
• Chicago PMI 51.6 vs 51.0 exp
• Stocks open lower
• AUD/USD base bearing fruit
• Euro climbs back over 1.32
• Greek press says Lagarde list altered
• Month-end flows
• European morning wrap: Finally some profit-taking on short yen possies

No “burasagari” for Abe in order to gaffes at bay Posted: 28 Dec 2012 09:44 PM PST  Apparently older and wiser after his first term in office, Prime Minister Shinzo Abe will not hold daily press interviews any more to avoid the verbal slips that plagued his hapless predecessors. … these abbreviated interviews, known as “burasagari,” often saw the nation’s leaders flip-flop on crucial issues and make embarrassing blunders. Thats a shame … Abe this time around to skip daily interviews in order to keep gaffes at bay

European economy still shrinking Posted: 28 Dec 2012 09:38 PM PST Gloomy weekend reading … well, if your in Europe anyway: The euro-zone economy looks set to shrink for the third straight quarter in the final three months of 2012, according to a preliminary gauge of activity published Friday, … The euro-zone economy shrank for six straight months to the end of September and the negative Eurocoin reading suggests it will shrink again in the final quarter of the year, even if the pace of decline appears to have slowed a little in December. Euro Zone Set to Continue Contraction  (Gated – a news search on the headline may turn up something)

ForexLive North American wrap: No deal or no deal Posted: 28 Dec 2012 01:33 PM PST Obama hosts White House meeting, no fiscal cliff proposal Fmr Greek finance minister accused of altering Lagarde list Chicago PMI 51.6 vs 51.0 exp US pending home sales +1.7% vs the +1.0% consensus Chatter about 60-90 day fiscal cliff mini-deal S&P 500 down 1.1% VIX climbs 16% to highest since June GBP leads, NZD lags The euro rebounded above 1.32 at the outset of US trading and quietly circled around 1.3220 afterwards. The fiscal cliff headlines were seemingly a stocks-only story, although the commodity currencies bounced around. The New Zealand dollar gapped 40 pips lower at one point but bounced right back. The pound was strangely bid throughout trading, assuredly flow related. Have a great weekend.

S&P 500 down 1.1% Posted: 28 Dec 2012 01:08 PM PST The main index closes down 1.1% to 1402. It`s the low of the day but above 1400. It will be interesting (and important) to see if that level holds on Monday, which is the final trading day of the year. For the week, the S&P 500 was down 1.9%.

Obama not making new fiscal cliff offer – RTRS Posted: 28 Dec 2012 12:56 PM PST Obama will begin a meeting on the fiscal cliff momentarily. According to a Reuters source he will not make a new offer but will lay out an approach he thinks can pass through Congress. If the leaders don`t support his plan, Obama will ask for a counterproposal. Obama`s plan includes tax hikes for earners above $250,000, an extension of employment insurance and other issues, according to the source. It sounds like the same old stories, stocks are unhappy.

Monti building centrist coalition Posted: 28 Dec 2012 11:54 AM PST Says preparations are being made for a group that supports his reforms. He believes the group can achieve `significant results`in the election.

EUR/JPY is the top performer on the week Posted: 28 Dec 2012 10:36 AM PST It wasn`t the quiet holiday week that most expect at this time of year in EUR/JPY. Even with today`s pullback, the pair gained 240 pips on the week and was the best trade. The gains this week confirm the breakout above the double-top at 111.59 and points to further gains for this pair. I`m weary of chasing the trade here after a swift rally from 100.50 since mid-November but this is clearly a buy-the-dips trade.

Don`t hold your breath on White House meeting Posted: 28 Dec 2012 09:23 AM PST Obama returned early from his Christmas vacation to host a meeting on the fiscal cliff this afternoon. If you like risk trades, the good news is that expectations for progress are nearly nil.

Eurogeddon averted or delayed Posted: 28 Dec 2012 08:53 AM PST A good story from Reuters, tracking down the many commentators who predicted a euro breakup in 2012. This is the common theme: It seems clear that many simply underestimated the political will in Europe to keep the euro together, and the impact that a series of policy shifts in the second half of 2012 would have on sentiment. No one is ready to change their call yet (and with good reason). They have simply changed the timeline.

Losses for European stocks Posted: 28 Dec 2012 08:46 AM PST UK FTSE -0.5% French CAC -1.4% Spain IBEX -2.1% Italy MIB -0.8%

Chatter about progress on fiscal cliff mini-deal Posted: 28 Dec 2012 08:15 AM PST CNBC’s John Harwood is reporting “slight movement” toward a 60 or 90-day mini-deal that would include tax hikes for those earning more than 400K, ending the sequester and closing some loopholes. If you’re going to kick the can, at least give us 6 months…

Papaconstantinou tossed from party Posted: 28 Dec 2012 08:13 AM PST Skai is reporting that this story has brought down the former finance minister. I assume there is a backroom deal going on where he gets to keep his money and stay out of jail as long as he doesn’t rat out the rest of the thieves in Parliament.

Housing pushed to the backburner Posted: 28 Dec 2012 07:34 AM PST Pending home sales were stronger than expected at +1.7% vs the +1.0% consensus but CAD and AUD are at the lows of US trading. The US housing recovery is no longer a fresh story and the market seems to have priced in a modest (less than 5%) price increase in 2013. What is increasingly clear is that a housing recovery won’t be enough to grow the economy faster than 2%. In addition, the consumer or manufacturing will need to contribute. Needless to say, it’s all in limbo because the government has tied an anchor around the neck of the economy.

Chicago PMI 51.6 vs 51.0 exp Posted: 28 Dec 2012 06:45 AM PST Prior reading was 50.4 Employment 45.9 vs 55.2 prior The employment number is weak.

Stocks open lower Posted: 28 Dec 2012 06:40 AM PST The S&P 500 is down 7 points, or 0.5%, to 1410. Mild risk aversion doesn’t seem to be hurting the euro and that will probably remain the case so long as the S&P 500 holds above 1400.

AUD/USD base bearing fruit Posted: 28 Dec 2012 06:01 AM PST The Australian dollar slump stalled near 1.0350 and is showing early signs of a rebound. The rebound has stalled ahead of offers at 1.0400 so far. The caveat is that the triple doji came on extremely low liquidity around the holidays.

Euro climbs back over 1.32 Posted: 28 Dec 2012 05:40 AM PST The euro has rebounded from 1.3165 to 1.3217. Volatile trading in Europe after the drop from 1.3255. The 61.8% retracement at 1.3221 is the key short-term level on my chart. Comments from Rajoy saying he hopes the government won’t have to intervene in the Spanish regions are getting the blame for the move.

Greek press says Lagarde list altered Posted: 28 Dec 2012 05:25 AM PST A story in the Greek press that cites anonymous sources says the original list of Greek citizens that had transferred large amounts of money to Switzerland  – the so-called Lagarde list — was altered by former finance minister Papaconstantinou to remove names of relatives on it. In October, Papaconstantinou said the list was misplaced and he didn’t know where it was. (h/t @MatinaStevis)

Month-end flows Posted: 28 Dec 2012 03:19 AM PST The talk is of general dollar demand, especially against the yen. Take it for what you will. Month end flows always give me the collywobbles……..

European morning wrap: Finally some profit-taking on short yen possies Posted: 28 Dec 2012 02:46 AM PST Japan FinMin Aso: Will intervene in currency market when speculation drives excessive yen gains OR LOSSES Japan FinMin Aso: Wants to reach agreement with BOJ on inflation target before BOJ January 21-22 meeting Japan Economy Minister Amari: Will work more closely with BOJ to establish shared policy goals China central bank says current inflation situation relatively stable China central bank sees weakness, uncertainty in world economy ECB’s Nowotny: Cautiously optimistic on finding way out of euro zone crisis in 2013 French Q3 GDP final reading +0.1% q/q, down from previous +0.2% French November consumer spending +0.2%, better than Reuter’s median forecast of flat Goldman Sachs buying Japan’s exporters on Abe policy bets - Bloomberg Here’s what’s behind the collapse of the Japanese yen - Business Insider Japan’s call for weaker yen spurs talk of copycat moves - WSJ For along time this morning it looked like we were going nowhere.  Then all of a sudden a bout of EUR/JPY selling out of the Far East set things alight. EUR/JPY is down at 113.58 from early 114.45, having been as low as 113.30 at one stage.  The Aso comment re intervening in currency market when speculation drives excessive yen gains or losses will have helped fuel the yen buying. But when all is said and done, does anyone really expect the BOJ to come in buying yen anytime soon? The EUR/JPY selling took its’ toll on EUR/USD which is down at 1.3170 from early 1.3240, having been as low as 1.3166.  The move accelerated when sell stops were tripped through 1.3200. USD/JPY down at 86.20 from early 86.45, having dipped fleetingly below 86.00.

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