Euro Steady but Sentiments Weak on European Debt

While Euro remains steady against dollar and yen, commodity currencies are broadly lower as market sentiments are weighed down by continuous concern on European debt crisis. AUD/USD stayed below parity as Asian markets are broadly lower following the -1.13% fall in DOW. Markets are still talking about Spain's 10 year bond auction yesterday, which completed with yield close to the unsustainable 7%. Focus will turn to new Greek Prime Minister Papademos' final budget for 2012 today. Finance Minister Venizelos will present the 2012 plan to cabinet. Then Papademos will fly to Brussels next Monday to meet with EU President Van Rompuy and EC president Barroso and then EU head of Finance Ministers Juncker the day after. IMF emphasized that Greece will receive the next tranche of bailout fund of EUR 8b if the "unity government now shares its commitment to the implementation of the economic program". It's important that Papademos' plan could secure political support from EU officials.

Also weighing down on market sentiment is China Banking Regulatory Commission's warning that banks should closely monitor risks from property loans. CBRC expressed worries on property companies which raised funding from non-bank lenders which main curtail their ability to repay bank loans. In some cases, there are major credit risks. Also, the regulator urged banks to step up asset sales and debt structuring for unprofitable government financing vehicles.

New York Fed Dudley said yesterday that he's "deeply unhappy with the current forecast of prolonged high unemployment". Dudley urged Fed to offer more guidance on the criteria needed before Fed leave rates from the current record low. Meanwhile, Dudley also support purchasing more long term financial assets if "deemed appropriate" and he favored doing much of the additional purchase in the mortgaged backed securities market.

On the data front, German PPI rose 0.2% mom, 5.3% yoy in October. Main focus today is on Canadian CPI whish is expected to moderate sharply from 3.2% yoy to 2.7% yoy in October. Core CPI is expected to drop from 2.2% yoy to 1.9% yoy. US and Canadian leading indicators will also be released.