Commodities retreated in European session although European finance ministers reached an agreement of putting 200 banks under supervision of the ECB. Investors were indeed concerned by Fed Chairman Ben Bernanke's warning on the fiscal cliff and the lack of progress in the negotiations between the White House and the GOP. The SNB left the target range for the 3-month Libor at 0.0-0.25% and maintained the minimum exchange rate of CHF 1.20 per euro unchanged. Policymakers warned of the risks on brought about by the sovereign debt crisis in the Eurozone and strength of Swiss franc on domestic economy and

Ahead of the EU summit, financial ministers agreed that the ECB would be act the supervisory overseeing around 200 European banks. The new supervisor should be ready by March 1, 2014. Eurozone ministers agreed in June that that when an effective supervisory mechanism is established, the ESM would be adopted for recapitalization of banks directly. However, Dutch Finance Minister Jeroen Dijsselbloem stated that the deal does not imply a step forward “on when banks can expect direct recapitalization from the ESM”.

The SNB left the target range for the 3-month Libor at 0.0-0.25% and maintained the minimum exchange rate of CHF 1.20 per euro unchanged. Concerning the economic outlook, the central bank expects Swiss economy to grow +1% in 2012 and +1% to +1.5% in 2013. For inflation, the SNB expects it to fall to negative level of -0.7 this year before recovering to -0.1% in 2013 and +0.4% in 2014. According to the statement, "the downside risks for the Swiss economy remain considerable" and the impacts from the Eurozone could be huge. The central bank stated that “although the measures announced by the European Central Bank have significantly reduced the probability of extreme developments in the monetary union, there is still substantial uncertainty”.

On the dataflow, US initial jobless claims probably stayed at 370K in the week ended December 8. Advance retail sales might have gained +0.4% m/m in November, following a -0.3% decline a month ago. Retail sales excluding auto probably stayed flat from a month October. US PPI probably eased to +1.8% y/y in November from +2.3% in the prior month while core PPI rose to +2.2% from +2.1% in October.

Oil and Gold Reports contributed by Oil N' Gold