Market Brief

FX markets were quiet in Asia ahead of the holidays. Regional indexes traded broadly higher, with Shanghai up 2.59%. After yesterday's weaker than expected US data, it seems that the USD dependence on yields and domestic economic data has become stronger than the year long risk aversion trade. Most of Europe is closed today and tomorrow is Christmas, when most major markets, with the exception of Tokyo, are closed. Thin liquidity and directionless trading should dominate FX activity. The GBPUSD opened in Asia at 1.5962, powerless to take advantage of yesterday's broad USD weakness, prompted by weaker US new home sales data. The barrier was the BoE minutes, which highlighted a dovish MPC in contrast with the recently hawkish Fed, increasing speculation that another £25bn expansion of asset purchases is on the table.In Japan, BoJ minutes from the 19-20th meeting showed that the board was very cautious in using the word deflation and weakness in demand was the cause that created continued decline in prices. In addition, there was no mention of buying more JGB as a possible solution. Afterwards, BoJ Governor Shirakawa stated that the JPY appreciation was one factor behind Japan 's weak economic performance since the financial crisis.With no economic data releases scheduled in European session, markets will have to wait until the US for some fresh news. Till then. discussion will be over Greece's just passed 2010 budget, which attempts to slash the fiscal deficit from an estimated 12.7% of GDP in 2009 to 9.1% of GDP next year. The spread between Greek and German bonds have narrowed slightly, but still are a point of concern and perhaps the biggest factor weighing on the EUR currently.

G10 Advancers and Decliners vs USD
Global IndexesCurrent Level% Change
Nikkei 225 Index10,536.92+ 1.53
Hang Seng Index21,517.00+ 0.88
Shanghai Index3,153.41+ 2.59
FTSE 100 Index5,372.38+ 0.82
DAX Index5,957.44+ 0.19
S&P future1,117.80+ 0.19
DJIA futures10,416.00+ 0.11
World MarketsCurrent Level% Change
Gold1,103.40+ 1.45
Silver17.33+ 1.25
VIX19.71+ 0.87
Crude wti77.17+ 0.62
USD Index77.69- 0.30
Todays CalenderEstimatesPreviousCountry / GMT
Durable goods orders, % m/m (y/y)0.4 (-7.6)-0.6,-11.6USD / 13.30
Core capital goods orders, % m/m (y/y)---3.4,-13.0USD / 13.30
Initial jobless claims, thous470480USD / 13.30
Tokyo CPI,-2.1-2.2JPY / 23.30
Nationwide CPI, % y/y-2.0-2.5JPY / 23.30
Unemployment rate, %5.25.1JPY / 23.30
Job-applicant ratio (x)0.450.44JPY / 23.30
Real household consumption, % y/y0.41.6JPY / 23.30
Currency Tech

R 2: 0.8925
R 1: 0.8835
CURRENT: 0.8895
S 1: 0.8735
S 2: 0.8645

R 2: 1.0635
R 1: 1.0575
CURRENT: 1.0476
S 1: 1.0470
S 2: 1.0435

R 2: 131.85
R 1: 131.60
CURRENT: 131.15
S 1: 130.55
S 2: 129.95

R 2: 12.970
R 1: 12.930
CURRENT: 12.906
S 1: 12.845
S 2: 12.767