FXstreet.com (London) - Wrapping up this session, the main stories were the Tankan and the unconditional bail-out funds from Abu Dhabi to Dubai World. Market sentiment swayed towards riskier assets in light of Dubai newsflow and the riskier currencies (eg EUR,AUD,NZD) all benefited.
Asian markets also firmed up on the change in investor confidence, and will act as a cue for London to likely gap open in several hours. In the absence of significant macro news today, US will likely follow and move up as investors move funds in aftermath to the 'risk-on' effect of Abu Dhabi cash injection.
Trade volumes on stockmarkets continue to sink as we get deeper into the holiday season and market players take time off. Many market players will closing down positions and locking in profits, before looking to new opportunites in 2010. Next years main story will be the unravelling of stimulus programs across the globe and the playing out of fiscal adjusts on the economies. How will the world economy fair when some of the external supports are started to be removed? Nobody is sure, but it is sure that many market players will be betting on it.
Markets will be eyeing FEDs speech, as usual closely monitoring tone and language to gain insight on potential future policy.