USD Jumps in Thin Liquidity - More to Come Before Year-End?

Thin markets were caught with some USD positive flows with much discussion as to what the actual driver of the USD buying was. Whether it is the start of year-end flows, delayed reaction to the geo-politicking by Iran or International Monetary Fund comments on Hungary's ability to meet targets for additional support, it does seem that the market was picking at stories to fit the move with thin liquidity exaggerating the move. Expect more of this scenario in the last days of trading of 2011.

Not much to report from the Asian session with all of yesterday's movement occurring late in the European session. The initial move was to extend the EUR's down-move (USD's gains) to new December lows below 1.29, eventually stalling at 1.2888. After that, it was a slow grind higher though again volumes were severely restricted.

The data calendar was bare and no news to drive markets so regional bourses traded on the heavy side in the wake of Wall St's fall last night, though a positive print in S&P futures helped stabilise losses.
After yesterday's almost blank data calendar, things pick up today with Germany releasing CPI data from its various states along with Eurozone M3 money supply and Sweden's trade balance. The US session features the weekly jobless claims data with better-than-expected data noted for the past three weeks.
The Chicago PMI data for December is also due with surveys suggesting the market is not convinced about last month's spike to 62.6 with median forecasts at the 61.0 level. Weekly Bloomberg consumer comfort data comes next with last week's uptick to 45.0 maybe looking a tad overdone. We also see the pending home sales data for November (housing data of late bringing a more positive tone) and finish with the Kansas Fed manufacturing activity index.

Data Highlights

• Sweden Nov. Retail Sales out at +0.8% m/m, +0.7% y/y vs. -0.3%/-1.0% expected and +0.4%/-0.6% prior resp.
• Swiss Dec. KOF Leading Indicator out at 0.01 vs. 0.23 expected and revised 0.34 prior

Upcoming Economic Calendar Highlights (All Times GMT)

• GE CPI - Various States (n/a)
• Sweden Trade Balance (0830)
• EU Euro-zone M3 Money Supply (0900)
• US Initial Jobless Claims (1330)
• US Chicago PMI (1445)
• US Bloomberg Consumer Comfort Index (1445)
• US Pending Home Sales (1500)
• US Kansas City Fed Manufacturing Index (1600)