Market goes into reverse ahead of year-end

•     Market goes into reverse ahead of year-end

–    Buys what was sold before, sells what was bought

–    USD declines vs all G10 currencies and most EM currencies as well (except TRY)

–    Global interest rates fall further as Spanish deflation intensifies; Eurozone Dec CPI expected to show the region has fallen into deflation

•     AUD rises along with iron ore

–    Iron ore up for last four days on hope for Chinese stimulus

–    I think they will shut down loss-making steel companies, while iron ore production is set to rise = price may fall further in 2015, dragging AUD down, in my view

•     Drop in rates, USD supports gold

–    Price yesterday was almost exactly where it was a year ago; could be worse

•     US rig count falls, heralding fall in oil production in coming years

–    Correlation between number of rigs and amount of output is uncertain

–    Oil for delivery way out in future is rising, but that doesn’t affect near-term market

•     Today:

–    US: Initial jobless claims 4-week average expected to move lower, pending home sales expected to rise = USD-positive