Markets are cautious as investors’ appetite for risk is about to be put to test since Spain and Italy are preparing to sell as much as 17 billion in debt today, while ECB and BoE will announce their key interest rates.
The European Central Bank and Bank of England are expected to keep the monetary policy unchanged this moth awaiting for more evidence about the effects of the previous easing measures.
After the ECB’s first interest rate decision for 2012, market’s will turn their focus towards Draghi’s press conference, yet the key economic data awaited from both Europe and the US today are also adding to the caution.
In Europe the industrial production is expected to fall in Nov. from the previous month, in the US retail sales are expected to improve in Dec., while in UK the industrial production fell below expectations in Nov.
Asian stocks retreated today as confidence turned more negative after Japan’s current-account surplus narrowed in Nov. on slowing demand for exports, while in China inflation eased to the lowest level in 15 months.
Although China’s policy makers are given more room to accelerate their easing measures, it indicates that consumption is weakening. Nikkei 225 fell today 0.74%, while Hang Seng fell 0.30%.
In Europe stocks are mixed ahead of the Spanish, Italian bond auctions while sentiment will be put to test ahead of ECB’s meeting. FTSE 100 fell 0.17% while CAC 40 gained 0.22%.
If investors will be disappointed by today’s results, the euro and other high yielding assets will face more downside pressures. For now the dollar index is moving with bearish momentum around the 81.25 level.
The euro is slightly higher around the 1.2720 level, while the pound is seeing losses trading around 1.5300 as the industrial production fell in Nov. more than expected. The yen weakened trading around 76.95.
The AUD is almost unchanged around the 1.0305, while the downside pressures imposed on the USD brought some gains to gold which is trading as of this writing around the $1648.10 per ounce level.
Japan said today it might reduce its petroleum imports from Iran, which continues to threaten shutting Strait of Hormuz in response to the US and EU sanctions, imposing upside pressures on crude which trades around $101.55.