EUROPEAN session review: central banks did not make any surprise

Data released: 

09:30 GMT UK Total Trade Balance (Nov) £-3.238B _ £-3.496B 

09:30 GMT UK Goods Trade Balance (Nov) £-9.439B £-9.450B £-9.651B 

09:30 GMT UK Trade Balance; non-EU (Nov) £-3.023B £-3.500B £-3.114B 

10:00 GMT EMU Consumer Confidence (Dec) -13.6 -13.6 -15.4 

10:00 GMT EMU Business Climate (Dec) 0.27 0.22 0.31 

11:00 GMT DE Industrial Production s.a. (MoM) (Nov) 1.9% 1.5% -1.2% 

11:00 GMT DE Industrial Production n.s.a. w.d.a. (YoY) (Nov) 3.5% 1.1% Revised from 1.0% 

12:00 GMT UK BoE Interest Rate Decision (Jan 9) 0.5% 0.5% 0.5% 

12:00 GMT UK BoE Asset Purchase Facility (Jan) £375B £375B £375B 

12:45 GMT EMU ECB Interest Rate Decision (Jan 9) 0.25% 0.25% 0.25% 

The ECB and BoE didn’t make any surprise by their rate decisions. BoE left its interest rate at 0.5% and Asset Purchase Facility was left at £375B. ECB left its rate at 0,25%. Interesting that some part of investors awaited for ECB rate cut. Now the market waits for ECB governor Draghi press-conference. 

Chris Giles of the FT thinks the UK economic growth will continue to outstrip productivity growth, implying unemployment will fall below the MPC’s 7% threshold, and the MPC will worry that inflation will start rising. 

EURO 

Data released showed year-over-year German Industrial Production increased by 3.5% in November, up from the 1.1% rise registered the previous month. 

On a monthly basis Industrial Production rose 1.9% in November, following a 1.2% drop in October and above forecasts of growing 1.5%. 

EUR/USD recovered to $1.3615. Initial resistance comes at $1.3650 (Tuesday’s highs), then - at $1.3720 and $1.3820 (Dec 30 highs). Below Wednesday’s lows losses may widen to $1.3520 (Dec 3 lows). 

POUND 

The pound rose after BoE decision, bot not for along time. 

Morning data released showed UK Goods Trade deficit narrowed to £-9.439 billion in November from £-9.651 billion in October. Analysts expected the deficit to narrow to £-9.450 billion. 

Total Trade deficit narrowed to £-3.238 billion in November from £-3.496 billion in October. 

UK Trade deficit non-EU narrowed to £-3.023 billion from £-3.114 billion and against expectations of widening to £-3.500 billion. 

GBP/USD challenged $1.6480 and retreated. Resistance remains at $1.6500/20. Support comes at $1.6380 and $1.6320. Below $1.6320 losses may widen to $1.6220 (Dec 17 lows). 

YEN 

Yen still consolidates versus the dollar. 

USD/JPY tests Y105.00. Above strong resistance comes at Y106.80 and Y107.30 (channel resistance line from Nov 7). Initioal support is at Y103.90. Below losses may extend to Y103.40 and Y102.20 (Dec 11 lows) and Y101.60/50 (Dec 5 lows). 

DATA AHEAD: 

At 13:30 GMT ECB Monetary policy statement and press conference due to come. 

The same time US reports Initial Jobless Claims.

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