20131205

Good morning,

Global risk taking took a breather in yesterday's trading session. Despite upbeat data from the US, markets have begun to price in a potential tapering from the Federal Reserve earlier than anticipated. Yesterday, the ADP report (a proxy for Friday's Nonfarm Payrolls) stronger than expected, following the line of relatively strong figures from the world's biggest economy. Of the main global indices, only the Nasdaq was able to take home a small insignificant gain of 0.02%, whereas the Dow and S&P fell 0.2% and 0.1%, respectively. US followed lower after an unimpressive session from the Euro zone, where weak retail sales sent markets on the offer eliminating gains from better than expected Markit Services PMIs. Euro Stoxx 50 fell 0.7%. In FX markets, EUR/USD had a volatile session with the 50-day SMA as the battleground. For the second day, the pair managed a close above, which has been followed up in today's Asian session with the pair currently trading at 1.3620. Despite weaker than expected PMI from the UK, Cable is still bid and currently testing the 1.64-figure. USD/JPY posted a doji yesterday with support at the daily Tenkan-Sen, but this level has been breached this morning, and the pair is back below 102, in time of writing.

Today, we should have an interesting day ahead of us with focus on Central Bank from Europe and from the US, the GDP for Q3 will be the main item. From the UK, we don't expect any changes and rates and asset purchases should remain constant. In the Euro zone, we expect an unchanged interest rate, and markets will be paying close attention to the statement by Draghi afterwards. The GDP from the US is expected to increase to 3.0% from the first release of 2.5%. This is quite optimistic as the figures, although with a positive bias, been mixed. Should the figures come out as expected, there will be a battle between risk taking and risk aversion given the fact, that the likelihood of tapering will increase.

Have a nice day