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Danske Daily: Markets In A "Risk On" Mood

ByDanske Markets
Published 11/25/2013, 02:39 AM
Updated 05/14/2017, 06:45 AM
JP225
-1.28%

In terms of data releases we have a very thin calendar. Focus will be on US pending home sales, which we expect to remain unchanged following the large decline last month.

The Iranian agreement might attract some attention and weigh on oil currencies (see more below).

The important euro area flash inflation figure for November is due on Friday. We expect it to increase to 0.8% but to remain at a level uncomfortably low for the ECB.

Selected market news
The US and its partners – Britain, France, Russia, China and Germany – managed to strike a deal with Iran Sunday. The deal curbs Iran’s nuclear programme and in return eases some of the sanctions on Iran. The US views the deal as a six-month confidence-building phase to allow for talks on a permanent agreement, which will be difficult to reach politically (see WSJ). The deal does not directly ease sanctions on oil exports but oil prices declined in response to the interim deal as it was viewed as easing geopolitical risks.

ECB board member Coeuré in a speech said that the decision to cut the refi rate was to ensure a large enough buffer from deflation. He also said that the ECB would act again if this buffer was further eroded. He did not touch upon which measures the ECB could use or how low the buffer could go before the ECB acts again. We continue to expect another 3-year LTRO to be announced early next year as euro area inflation is set to go lower over the coming four to five months.

Overall markets are in a ‘risk on’ mood this morning. JPY has declined to a fresh high since May this year and Asian stock markets are up this morning with the Nikkei index taking the lead. The S&P 500 futures are also trading higher.

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