FX space largely unchanged last week as all currency pairs posted ±1% change against other G20 counterparts
Gold prices were a shade lower, meeting strong support around $1670 per troy ounce
Short-term, traders remain sceptical as to whether we have seen enough to reverse the crisis of confidence in the Euro-zone. Chances of an IMF program for either/both Italy and Spain has increased with news of an additional €200bn IMF fund
Domestic demand is slowing in China as well as globally – prime data out this week could be the most market moving FX theme in the absence of revelations in Europe
Oil and Gold remain the most volatile contracts as risk tolerance reversed course. Commodity currencies and Scandies were the pack leaders last week in G20 FX – most strength seen against USD and JPY
ECB expected to cut interest rates again (Thu) and provide additional liquidity. Political progress also a key focus – full fiscal union would be hugely EUR/USD positive
Periodic Chinese activity data could be crucial if global economic slowdown is worse than feared
On the political front, near-term focus is on Italy’s reform agenda to be unveiled today and on the new Spanish government’s program once it takes office on December 22nd
Multiple central bank meetings coming up: RBA and BoC on Tuesday, followed by RBNZ, BoE and ECB on Thursday. The RBA could be market moving because a cut is fully priced but the bank may not ease so soon after its previous move