Tight ranges overnight as US market holiday impacts

We witnessed tight ranges and slow trading activity as the US holiday provided little impetus to trade. EUR continued to stabilize at lower levels after the Friday sell-off. Markets showed muted reaction to Moody’s comments echoing those of S&P saying France’s AAA rating may be under threat if the debt/GDP ratio continues to rise. EUR’s support was consolidated on ECB’s buying of Spanish and Italian bonds.

On the European data front, German wholesale prices were much lower in December, falling 3.0% y/y from 4.9% and flat m/m versus +0.7% m/m the previous month. Swiss producer prices, in contrast showed the opposite trait, rising 0.3% m/m versus a consensus view of -0.1% and -0.8% previously. On an annual basis prices fell 2.3% following a 2.4% decline in November.

Ranges have been tight in Asia so far with little in the way of macro inputs and developments to impact. On the data front the session kicks off with Japan’s tertiary industry index followed by Singapore’s exports data. China’s Q4 GDP will be a major highlight and most eagerly awaited by AUD traders. Industrial production, retail sales and fixed asset investment are also due. The European session starts with UK’s CPI/RPI numbers with BOE speakers out in force during the morning – King, Haldane, Cohrs and Jenkins all scheduled. Euro-zone CPI follows shortly thereafter followed by the ZEW surveys for both Germany and the Euro-zone.
The US returns from holiday with empire manufacturing data for January (with a growing concern that we may have already seen the best of this series) while the Bank of Canada holds its rate meeting , with nothing exciting expected to come out of it.