Market attention is likely to centre on the fiscal cliff negotiations, as the deadline is moving closer. President Barack Obama and House speaker John Boehner still have five days after Christmas to strike a deal but it is possible that the US will go "over the cliff."
We expect some improvement in the ISM and a decent employment figure, when these are released in the first week of the new year.
Global update
Data in the euro area has started to surprise on the upside. This week it was the German Ifo figures that signalled improvement going forward.
The Liberal Democratic Party won a landslide victory in Japan. The new prime minister's first priority will be to push Japan out of recession with additional fiscal easing and increased pressure on the Bank of Japan for more aggressive QE.
The Riksbank cut the leading interest rate by 25bp to 1% as expected. Looking ahead, we expect the Riksbank to deliver another rate cut in April.
Norges Bank kept rates unchanged. We expect Norges Bank to hike rates twice in the course of 2013.
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