European Majors Firm In Quite Markets

Markets were rather quite overnight in spite of some mixed economic data from US. The Dow edged to new record high at 16120.25 but pared much gain to close nearly flat at 16072.8. S&P 500 also closed nearly flat at 1802.75. Both indices managed to stay above 16000 and 1800 psychological levels respectively. Treasury yields tumbled for another day with 30 year yield closed down at 3.785%, comparing to last week's high of 3.938%. 10 year yield also extended the decline to close at 2.696%, comparing to prior week's 2.839%. Dollar index continues to draw stay in tight range above 80.5 level for the moment.

In the currency markets, Aussie remains the weakest major currency this week. RBA deputy governor Lowe's comment gave Aussie a brief lift but it quickly lost ground again as markets are expecting more measures from the central bank to curb the currency's strength. Yen lost some downside momentum as rally in the stock markets lost steam. Meanwhile, European majors are generally firm. EUR/USD is pressing near term resistance at 1.3578 for the moment and might extend recent gain even though upside momentum is a bit unconvincing.

ECB executive board member Asmussen spoke again yesterday and said he described recovery in Eurozone as "weak, fragile, uneven, but it is going in the right direction." He urged efforts to the fiscal "consolidation course". And, he noted that Eurozone still has a "fragmented situation on financial markets". Meanwhile, another executive board member Mersch said that the "scope of action" of central banking is "limited". And, he emphasized that "the effective and successful conduct of monetary policy must not be used as a pretext for complacency in other policy areas."

Speaking before the Treasury Select Committee yesterday, BoE governor Carney reiterated that the 7% unemployment level in the forward guidance is merely a threshold but not a trigger. He emphasized that what the forward guidance is doing is "giving businesses, households, financial-market participants, parliamentarians perspective on the conditions that are necessary to exist in the economy before the MPC would begin to consider adjusting monetary policy." Deputy governor Bean said that "perfectly possible to issue new guidance that, say, they expect to be able to maintain it until 6.5 percent."

On the data front, New Zealand trade deficit came in narrower than expected at NZD -168m in October. Swiss UBS consumption indicator, German Gfk consumer sentiment, UK Q3 GDP revision will be released in European session. US will be on thanksgiving holiday tomorrow and a number of economic data will be released today. Initial jobless claims, durable goods orders, Chicago PMI and leading indicators will be released today.