Feels a little like the Forex market has a hangover after the QE figures yesterday. Ben Bernanke’s statements certainly appeased investors and traders alike, who welcomed the introduction of QE and further took to his statements on the focus being on jobless claims and growth. Interesting to note, the FED will cease to purchase short-based securities (because they have all sold out!) and elect to purchase mortgage-backed securities instead; purchasing mortgage-backed securities was a fundamental contributor to the financial crash. Is the US literally buying itself out of the recession?

Spain and Italy achieved their 2012 debt funding requirements through successful bond sales, which concluded today. That doesn’t necessarily mean that they are out of the woods, rather more, it implies that the ECB has provided the much needed support in usurping the excess bonds and pinning down borrowing costs. The Banking Union, now agreed, is likely to build the confidence of the Eurozone and the Euro has begun to show movement upwards once again.

CPI figures in the US tomorrow, after key Japanese data tonight. (JKM)

Global equity markets rallied and currencies steadied their position against the USD today ahead of statements from the FOMC later this evening. Analysts are confident in further stimulus being added, with recent stimulus having a positive impact on the economy over the year. Poised in a difficult place, the USD continues to look vulnerable to losing ground as the fiscal cliff blocks the longer-term outlook. There is always room for disappointment with such a build-up and the USD sell-off could open the door for an aggressive retracement.

Unemployment figures in the UK came in surprisingly better than expected, so much so that data released today showed that unemployment in the UK fell by 82,000. It’s a positive figure for the UK, but shouldn’t distract from the greater issues at hand. Incoming governor, Mark Carney, today indicated that his focus would be on the growth of the economy, at the cost of inflation if manageable. The BoE has always focused on the 2% inflation target; something which the incomer appears to be less concerned about.

The USD is looking a little slippery as the FED tries to make Christmas that little bit merrier. (JKM)

Worrying news out of Italy affected the Euro as Mario Monti prepared to leave office after losing support of the house. He hasn’t done much wrong, in fact he has done well to give Italy certainty in the Eurozone and implement various changes to the Eurozone. His loss of powers comes from the backers of Berlusconi who are now preparing to support him in his bid to return to office. Berlusconi’s pledge is to withdraw austerity measures from the Euro Zone, although the EU responded stating that Italy does not have the option to withdraw. Another case of politics beating economics in the Eurozone.

What is the market waiting for? We have German Key Data over the next couple of days, which will underline the impact of the Eurozone on the once glorious economy. We have jobless claims in the UK following non-Farm Payrolls in the US last week, we have the FOMC meeting on Wednesday evening to hear the Feds view on interest rates and stimulus, Thursday sees US Retail Sales, Swiss interest rate decisions as well as Japanese manufacturers outlook. If that isn’t enough, European CPI, USD CPI, US Industrial production on Friday with a Japanese election means it is all to trade for!

Its almost like this week is a Christmas gift to forex traders. (JKM)

Non-Farm Payrolls continued to impress alongside unemployment rates in the US edged downward to 7.7% from the previous 7.9%. The markets had been relatively calm coming into the mid-day announcement, with most traders looking poised to become involved in the USD again. Good news doesn’t last long in the US and the USD weakened against the Euro after the NFP announcement as the US House Speaker reported that no progress has been made on the fiscal cliff situation.

Looking forward to Japanese GDP next week. Much has been made of the struggling economy and the resultant political undertones of what a new leader might bring. At first there a confident statement enforcing the weakening of the Yen further and negative interest rates, now there appears to be a ‘hands off’ type approach. This will be the last GDP figure before the big election.

Have a good weekend, I know I need one. (JKM)

The ECB met earlier today to discuss interest rates, in the backdrop of a negative GDP figure earlier in the morning. The sentiment was slightly worrying, with the Eurozone expected to remain in a recession until the second half of 2012 at best. Members of the ECB also discussed a cut in the interest rates which, arguably, would be a good move to force down borrowing costs. With the recent bailouts for Greece in place, a cut in rates would certainly add downward pressure to borrowing costs which have squeezed the Eurozone. The result of such a discussion was the Euro wakening dramatically. A meeting which began with little real interest ended as traders scrambled for short Euro positions.

Over in the US, the President indicated overnight that he hadn’t ruled out the possibility of the economy going over the cliff, before a deal on taxes could be reached. It is a shame to see politics interfere with economics again, although there is some certainty that an agreement will be reached before the USD heads to the abyss. Non-Farm Payrolls should cap off an entertaining first week to December.

Ironically, during last December were the dark days of the Eurozone; with USD, CHF, JPY and GBP all in play this Christmas it should be an exciting one. (JKM)

There was a lot of talk by traders about what the figures announced today might mean for sterling. Growth forecasts for the UK were revised downwards, as the Eurozone and a slowdown in Asia resulted in the UK not being able to capitalise on a previous strong position. On the same note, the deficit grew, so the Chancellor has had to push back his target dates to correct the structural deficit. Although not popular in his approach, the Chancellor remained defiant during the Autumn Statement, which in itself is a positive sign.

The AUD has seen increased trading volume as a rate-cut earlier in the week caught the markets’ attention. The Australian economy is struggling as a result of the slowdown in Asia and the government is keen to ensure the situation is under control. We have seen some interesting employment figures in Australia; overnight should be no different. Throw in Eurozone GDP, BoE Rate Decision and a statement from the Canadian Central Bank tomorrow and we have ourselves quite a trading day.

It’s cold out there, but the market is hotting up again. (JKM)

The Euro gathered strength in the market as investor’s cheered news that Greece has plans in place to buy back debt. This will add certainty to the Eurozone in bundles, something that has scared investors away for the past couple of years. It appears as though Eurozone leaders have finally ‘flicked’ the switch that has settled the troubled economic area. Ironically enough, one Eurozone leader appears somewhat compliant, now that a general election is on the agenda. Angela Merkel kicked off her re-election campaign today and, although the general consensus in Germany is against pouring vast sums of debt into the Eurozone, the electorate would rather see a stable area now that Germany is beginning to feel the impact of a slump.

The USD, however, has begun to struggle. Weak ISM manufacturing data pointed to the struggles that lie beneath the previous months of good data and strengthening dollar, whilst the fiscal cliff remains to threaten the progress of the past few years. The US is confident there will be a solution, but the markets aren’t so sure. The fiscal cliff is being billed as D-Day for the US and the build-up is likely to end in a greater disappointment. Can America really fail here?

Setting up for a strong finish to the week. (JKM)

The ‘fiscal cliff’ situation is turning into a Eurozone-type affair. Not so much in the negative impact just yet, but more the uncertainty of the outcome. There appears to be an underlying sentiment that an agreement on taxes will be reached, but there is little certainty on when. A recent proposal by President Obama was turned down and there is no doubt that the solution will need to be co-ordinated by both sides. However, the USD will begin to move in a RORO trend as investors turn to the US currency and then away from it.

The Japanese Yen is in a similar position. As it stands, a form of intervention or weakening of the Yen is required to rescue the struggling economy. Presidential frontrunner, Abe, began by talking of his aggressive policies to weaken the Yen, allowing inflation to move to up to 3% and introduce negative interest rates. Recent comments have seen him retract this position, now claiming that he will leave the BoJ to handle what should be its affairs.

December will be an interesting month, particularly with the Eurozone bubbling. (JKM)

Strong figures out of Switzerland this morning laid testament to the SNB policy of supressing the CHF which, although still viewed as the premier safe-haven, was weak enough to attract sufficient interest in exports. The Swiss economy grew 1.4% for the year, which is surprising considering its proximity to the Eurozone. The SNB has maintained its policy, stating its intention that it will prevent the CHF from becoming the only safe-haven.

Housing data in the US came out strong earlier today, with Pending Home Sales rising to 5.2%. This figure is significantly higher than expected and points towards a recovering economy, as consumers are both willing and able to engage in taking on mortgages. The availability of mortgages implies a release in credit liquidity, which will add further to durable goods sales and GDP figures. Although Jobless Claims data remains constrained, positive sentiment on an end to the ‘fiscal cliff’ has been spurring on the USD and equity markets. The week doesn’t end here; Personal Consumption figures out in the US tomorrow afternoon could seal a triumphant week for the USD.

Switzerland and the US are proof in the pudding why a European Union will never work… (JKM

The US has been discussing the pending ‘fiscal cliff’ crisis today, with a surprising positive tone. Comments yesterday worried the markets as it looked like the US were going to wait and see what would happen when the deadline passed. Today both the speaker of the House and the President shared sentiment that concessions are on the table to ensure that an agreement is reached. Equity markets and the USD rallied late in the session as confidence returned.

Data out in Switzerland tomorrow should show growth in the Swiss economy. The SNB has been shielding the Franc in an effort to prevent an overvalued Franc from ruining growth. The SNB have maintained their view that they don’t want the Franc to be a safe-haven and with the Yen weakening, investors are running out of safe havens to run from. Don’t forget US GDP figures tomorrow afternoon as well, hopes on a strong US economy could give the USD momentum once again.

Busy end to November coming up! (JKM)