Risk reduction dominates after Chinese & Greek

•     Risk reduction dominates after Chinese & Greek 

  stocks plunge

–    China stocks down 5.4% after rising sharply

–    Greek stocks down 13% on increasing likelihood of an election

–    Risk aversion sends USD lower against most currencies, with JPY gaining most

•     Sharp move may have established new ranges for December

–    As market quiets down for the holidays, we have an idea of the likely highs and lows

•     China PPI and CPI both lower than expected

–    Means recent monetary easing hasn’t fed through to prices yet

–    Suggests more easing possible = USD-positive, risk positive

•     Today: with no major indicators or speakers, FX market is likely to follow stocks

–    Eurozone: French industrial production for October

–    Norway:  CPI for November expected to slow, could be NOK-negative

–    New Zealand: RBNZ meeting expected to keep rates on hold. Emphasis will be on press conference to see if they are still concerned about the currency and whether they have moved to a more dovish stance that means next move could be a cut in rates