- ZEW Economic Sentiment (EU, 10:00 GMT)
- German ZEW Economic Sentiment (GER, 10:00 GMT)
- Trade Balance (Can, 13:30 GMT)
- Trade Balance (U.S, 13:30 GMT)
- BoC Gov Carney Speaks (Can, 18:20 GMT)
President Barack Obama extended an offer of cooperation rather than confrontation with congressional Republicans over taxes and the budget in a speech a day after he met with House Speaker John Boehner. As he promoted his plan to avoid more than $600 billion in automatic tax increases and spending cuts set to begin in January, Obama said he’s ready to make a deal with Republicans. Still, he held firm on his proposal to let tax rates rise on top earners as the first part of any agreement.
Prime Minister Mario Monti said that investors shouldn’t expect the imminent demise of his government to lead to a political vacuum that will fuel market turmoil in Italy. The market reaction will be “contained” and investors “shouldn’t fear any decision-making void,” Monti said at a press conference in Oslo yesterday. He will resign when Parliament passes his budget plan later this month and elections may be held as soon as February.
Bank of England Governor Mervyn King said the Group of 20 nations must revive efforts to address global imbalances or more countries may start using exchange rates as their key tool for monetary policy. Since their agreement on stimulus in 2009, “the G-20 has gone backward since then, and there has been no agreement on the need for working together to achieve some element of rebalancing the world economy,” King said in a speech in New York late yesterday.
EUR/USD: The EUR/USD was trading in the narrow range of 1.29598 and 1.29239 at the time of writing as investors jumped on the sidelines ahead of the Federal Reserve two-day meeting starting today and as market participants are weighing the news of Italian Prime Minister Mario Monti’s resignation. Market sentiments remain fragile and investors should be very cautious on the market. The news and data likely to affect the pair are; the ZEW Economic Sentiment in Germany, which will probably come at -11.5 this month from -15.7 in November, according to the median estimate of economists in a Bloomberg survey.
A separate gauge assessing the current economic situation may rise to 6 from 5.4 last month. The ZEW Economic Sentiment in eurozone is expected to come at 0.1 compared to -2.6% registered previously. While in the U.S, the FOMC will begin its last meeting for 2012 today. Dealers that trade securities with the central bank expect it to begin buying as much as $45 billion a month in Treasurys and to keep benchmark interest rates about zero into 2015, according to Bloomberg News surveys.
More over the U.S will release its trade balance data, which is expected to come at -42.6B compared to -41.6B recorded previously. The political turmoil in Italy, the renewed concerns over the debt crisis in the eurozone and the talks aiming at avoiding the U.S. fiscal cliff will continue to bring volatility on the pair. The resistance level is at 1.30093 and the support level is at 1.28854.
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USD/CAD: The USD/CAD traded near a (Seven-week low) as the government approved Cnooc Ltd. (883)’s $15.1 billion takeover bid for Nexen Inc. (NXY) yesterday and after better-than-forecast factory data from China signaled stronger demand for Canada’s raw materials. The pair was trading flat at 0.98612 at the time of writing as investors turned cautious ahead of the Federal Reserve two-day meeting starting today.
The FOMC will begin its last meeting for 2012 today. Dealers that trade securities with the central bank expect it to begin buying as much as $45 billion a month in Treasurys and to keep benchmark interest rates about zero into 2015, according to Bloomberg News surveys. Other events likely to affect the pair are the trade balance data in the U.S, which is expected to come at -42.6B compared to -41.6B recorded previously. Meanwhile, Canada will release its trade balance data, which expected to come to -1.0B from -0.8B.
Data from the eurozone such as the ZEW Economic Sentiment in Germany and the eurozone will affect market sentiments from risky assets. Moreover, the political turmoil in Italy, the renewed concerns over the debt crisis in the eurozone and the talks aiming at avoiding the U.S. fiscal cliff will also weigh on sentiments. Investors should be prudent. The resistance level is at 0.99146 and the support level is at 0.98060. 
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Gold: The price of gold was slightly lower at 1709.15 at the time of writing on profit taking ahead of the Federal Reserve two-day meeting starting today and on concerns over the political uncertainty in Italy. The FOMC will begin its last meeting for 2012 today. Dealers that trade securities with the central bank expect it to begin buying as much as $45 billion a month in Treasuries and to keep benchmark interest rates about zero into 2015, according to Bloomberg News surveys.
Additional monetary stimulus by the Fed would likely depress the U.S. dollar in the near-term, which would be supportive of higher commodities prices. Other event likely to affect the commodity is the trade balance data in the U.S, which is expected to come at -42.6B compared to -41.6B. . Moreover, the political turmoil in Italy, the renewed concerns over the debt crisis in the euro zone and the talks aiming at avoiding the U.S. fiscal cliff will also weigh on sentiments. The resistance level is at 1727.69 and the support level is at 1690.20.