SaxoBank Market Review
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pro-forex
Daily Report Dec. 20 2011
By Saxo Bank
European data better than expected; US housing to follow
suit?
European data proved to be better than expected today as the
IFO survey from Germany showed improvement for the second time
in a row after a string of declining numbers dating back to
early 2011. Housing data from the US will attempt to keep the
positive vibes going though consensus looks for rather flat-ish
results.
German data beats expectations; Riksbank lowers key rate: The Swedish
central bank, the Riksbank, lowered its repo rate by 25 basis points to 175
earlier today as expected by consensus (eleven of 24 analysts had predicted a
25bps cut, four a 50bps cut and the remainder unchanged rates) though that did
not stop the SEK from gaining 0.3 percent on the EUR so far today. In addition
to the repo rate cut the central bank lowered its projections of future repo
rates to 1.7, 2.1 and 2.9 percent in 2011-2013, respectively, from 2.2, 2.7 and
3.3 percent earlier.
Turning to Germany the IFO survey proved better than feared by recording 107.2
in the composite Business Climate Index (106 expected, 106.6 prior). The gains
were driven by the Expectations Index, which recorded 98.4 (prior: 97.3), while
the Current Assessment Index was flat at 116.7. This was the second straight
improvement in the overall index.
US housing market to continue to improve? Yesterday's NAHB Housing Market
Index printed its third monthly gain in as many months in December, rising to 21
from 19 a month earlier and just 14 in September. Especially the Future Sales
component has been strong recently and now stands at 26 from just 15 in June
while Present Sales are lagging a bit at 22 against 13 in June. Despite the
improvements an overall reading of 21 still points to massive distress in the
housing sector.
Today we continue with another housing report, namely the one containing
Housing Starts and Building Permits. Consensus looks for rather small changes of
1.1 and -1.4 percent, respectively, in November, though we note that gains have
been observed in the forward-looking Building Permits series recently. The
six-month change in the six-month moving average stands at 7.3 percent and is
now just 5.5 percent below the 2010 peak, which was heavily influenced by the
wasteful Homebuyer Tax Credit programmes.
Canadian CPI in line: Freshly released CPI numbers from Canada show
roughly unchanged consumer price inflation with CPI up an unchanged 2.9 percent
year-on-year in November while core prices rose 2.1 percent, down from 2.2
percent.
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