Price action was fairly muted overnight as markets prepare for the holiday season, and with the lack of headline data releases in Asia we expect to see a fair amount of range bound trading. Nevertheless, risk assets could benefit from the better than expected US jobless data.
Themes:
US jobs data is slowing improving, suggesting that the US labour market may be in better shape than commonly assumed. The official figures showed jobless claims where 364K versus consensus estimates of 380K.
Speaking to the Financial Times, the ECB's outgoing Executive Board member Bini-Smaghi said that the US and UK are engaging in QE because their respective central banks saw strong deflation risks, and that this is not the case for the Eurozone, hence the ECB has not elected to flood the market with euro's. However, he also stated that ‘if conditions changed and the need to further increase liquidity emerged, I would see no reason why such an instrument, tailor made for the specific characteristics of the euro, should not be used'.
According to the Wall Street Journal, the Federal Reserve is revisiting its August projection on interest rates, where it communicated the possibility of zero rates staying until 2013.
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