Forex Investment and Currency Trading

Israel launches air strikes on the Gaza strip to halt rocket attacks by Islamic militant groups. Recent developments come after the 6-month Israel-Hamas cease-fire expired Dec 19th. Feb Crude futures up 6.6%, above the psychologically important $40 mark- last $40.37. Gold Feb futures up $13.80, now $884.60 after briefly touching $892 earlier this morning. EUR is up against majors being viewed, along with gold, as a safe haven instrument in times of geopolitical uncertainty after recent outperformance against the Dollar and Pound. Equities are higher driven by resource stocks’ outperformance. The FTSE is up 2.40%, the DAX is up 2.09%, the CAC is up 1.06%. Asia broadly unchanged to a touch higher with insurance stocks surging on reports Mitsui Sumitomo, Aioi and Nissay are in talks to merge their operations next year. The NIKKEI is up 0.09%, the Hang Seng is up 1.02%. The Ruble falls to an all-time low against the EUR after the Russian CB allows it to devalue 1.7% according to an unidentified official.

HIGHLIGHTS

• FT: Tokyo rejects talk of further stimulus.
• France Q3 GDP +0.1% q/q and +0.6% y/y – as expected.
• Israel Moves Tanks Toward Gaza, Rockets Hit Ashkelon.
• FT: Iceland to hold UK store stakes.
• NY Times: No word on GMAC Vote as Deadline Expires.

CURRENCIES                                              

• EUR/USD 1.4062 – 1.4363  Open: 1.4344
• USD/JPY 90.04 – 90.75  EUR/JPY 127.55 – 129.69  Open: 90.14, 129.31
• USD/CHF 1.0423 – 1.0675  EUR/CHF 1.4945 – 1.5043  Open: 1.0439, 1.4978
• GBP/USD 1.4645 – 1.477  EUR/GBP 0.9595 – 0.9776  Open: 1.4675, 0.97682
• USD/CAD 1.2072 – 1.2208  Open: 1.2189
• AUD/USD 0.6837 – 0.6961  Open: 0.695
• NZD/USD 0.5745 – 0.5853  Open: 0.5835

FLOWS

• Nikkei  8747.17 up 0.09 % Topix 854.77 up 0.97 % Hang Seng  14328.48 up 1.02 %
• ASX 200 3621.10 up 1.09% Kospi 1117.59 down 0.02% TSE Mothers 325.34 up 3.04%
• 10yr JGB Price 101.877 (+0.08) Yield 1.189% (-0bp) 10yr ACGB Price 110.782 (+1.03) Yield 3.954 (-12bp)

NEWS

• NY Times: No word on GMAC Vote as Deadline Expires. Two days after a crucial deadline passed, GMAC, the financing arm of General Motors, remained silent Sunday over whether bondholders had approved a plan that would help provide GMAC with federal bailout money. GMAC bondholders had a midnight deadline on Dec. 26 to approve a bond-exchange program that would have enabled GMAC, which provides loans to car buyers and dealers, to have sufficient capital — a move that GMAC says is necessary for it to continue functioning.
• WSJ: Dow’s Plan for Growth Threatened by Scuttled Kuwait Deal. Kuwait scuttled a multibillion-dollar joint-venture deal with Dow Chemical Co. that was set to take effect Thursday, potentially complicating the chemical giant’s efforts to complete a huge acquisition. Dow said Kuwaiti officials informed the company on Sunday that the Persian Gulf country is scrapping a deal under which a state-owned petroleum company was to pay Dow $7.5 billion for a 50% stake in several chemical plants. Dow intended to use that money to help finance its $15.3 billion purchase of Rohm & Haas Co., which makes coatings and electronic materials.
• Bloomberg: Recession Opens U.S.-China Rift Paulson Talks Bridged. The global recession is re-exposing fissures in U.S.-China relations that Treasury Secretary Henry Paulson spent more than two years smoothing over. Heightened tensions between China and the U.S. may worsen a contraction in world trade that already threatens to deepen and prolong the economic downturn. The friction comes as President- elect Barack Obama readies a two-year stimulus package worth as much as $850 billion that will require the U.S. to borrow more than ever from China, the largest buyer of Treasury securities.
• Bloomberg: Flowers, Dune, Paulson & Co. Said to Lead Group Buying IndyMac. J.C. Flowers & Co., Dune Capital Management and Paulson & Co. are leading a group of private- equity and hedge-fund investors seeking to buy failed lender IndyMac Bank, said three people familiar with the transaction. The bidders are close to an agreement with the Federal Deposit Insurance Corp., which seized the lender in July, said the people, who requested anonymity because the negotiations are continuing. An announcement could come by the middle of this week, the people said.