EUR/USD is back to where it started on 4 Jan 1999

•     EUR/USD is back to where it started on 4 Jan 1999

–    Will it continue lower to retest the lows of Oct. 2000 (0.8255)? Stay tuned!

•     ECB board still seems divided going into next week’s meeting

–    Draghi says they’re unanimous, Coeure disagrees

–    If they can’t agree on QE next week, I expect there would be a big sell-off in European bonds and stocks, a repatriation of funds and a drop in EUR

•     Chinese PPI falls more than expected in December

–    Eventually China may export deflation around the world, helping to keep short rates low and intensifying the currency wars

•     Today:

–    Eurozone:  Nov. industrial production from Germany & France

–    UK:  Nov. industrial production seen rebounding = possible GBP-positive

–    Norway:  CPI for December seen rising = NOK-positive

–    Canada: Unemployment rate for Dec expected unchanged @ 6.6%

–    US: Non-farm payrolls for December forecast to be +240k, down from extraordinarily high 321k in Nov but still keeping up the string of +200k figures. Unemployment rate expected to fall to 5.7% from 5.8%, average earnings seen accelerating. Strong report should be USD-positive