Data/Event Risks
- USD:  This is the ‘bridge’ day that many in US take off after yesterday’s holiday. Volatility risk mainly from orders (large institutional) pushing market with low liquidity.
- GBP: Data on lending for house purchase is not a big market-mover, but sterling may be a little more sensitive in low liquidity environment. Lending has been improving of late.
- EUR: The IFO index is the main risk, with weaker number (expected 99.5) making euro vulnerable on fears of more protracted slowdown in Germany. Update: It suprised to the upside.
Idea of the Day
This is the day known as ‘Black Friday’, when US retailers supposedly move into the black (profit) as Christmas shoppers go crazy. It’s never clear whether we should celebrate or fear rising spending from US consumers. After all, debt-fuelled spending was one of the reasons (but not the main one) why things went wobbly in the US before. US consumer spending is still more than 70% of the US economy, so the rebalancing away from consumer spending still has some way to go. In markets, the main risk comes from low liquidity on a Friday, which could make for some choppy end-of-week trading conditions.
Latest FX News
- EUR: EU leaders look unlikely to agree on a long-term budget deal at today’s summit.  EUR a touch lower on Merkel headlines overnight, but recovered, helped by firmer tone to stocks.
- JPY: The yen firmer, despite the gains in Asian stock markets (holiday in Japan), reflecting the fact that the curreny is seeing some short-covering pushing USD/JPY lower into the end of the week.
- AUD: Apocalyptic talk from Gina Rinehart, mining billionaire, said Australia risks being another “Greece, Spain or Portugal†as it becomes less competitive in the mining sector, losing out to African nations. Aussie not concerned, pushing above 1.04 as Asian stocks have moved higher every day this week.
