Financial Markets Rose ahead of a Busy Week

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December 11, 2012 12:36 AM EST

Financial markets firmed on Monday as US employment data surprised to the upside. Yet, the uplift sentiment should be temporary as this week's calendar is rather busy. The FOMC meeting due Wednesday is expected to see announcement of an open-ended commitment to buy securities totaling US$85B per month from the beginning of next year. The SNB is expected to leave the 3-month LIBOR target a 0% Thursday. Over the weekend, news flow from the Eurozone was not optimistic in that Italy's Prime Minister Monti Mario would resign and election would be held after passage of the Budget while Greece's debt buyback plan received bid of 26-28b euro, an amount below the target of 30B euro.

After losing support from Silvio Berlusconi's party in the Parliament, Italy's Prime Minister Monti Mario announced that he would resign after the budget for next year is approved. Berlusconi said that he would run for the election shortly after Mario's announcement. An election will be held 45 to 75 days after President Giorgio Napolitano dissolves the parliament. The Greek buyback plan, aiming to reduce about 20B euro from the country's 323B euro debt, is the latest debt reduction program announced by the government. Yet, it's reported that 26-28B euro of bids have been placed so far, compared with the target of 30b euro.

China released key economic data on Sunday. Industrial production growth rose to +10.1% y/y in November from 9.6% a month ago. Retail sales soared +14.9% while CPI climbed +2% y/y last month, up from +1.7% in October. Trade data was, however, weaker than expected. Exports growth decelerated to +2.9% y/y in November, from +11.6% a month ago. Imports growth was flat, following a +2.4% increase in October.

Commitments of Traders:

With the exception of crude oil, speculators were bearish towards the energy complex in the week ended December 3. Net length for crude oil futures climbed +13 799 contracts to 193 833. Net length for heating oil dipped 4 472 contracts to 16 252 while that for gasoline slid -176 contracts to 73 625. Net short for natural gas dropped -25 193 contracts to 116 609.

Speculators were mixed towards precious metals during the week. Net length for gold future was down -34 671 contracts to 165 736 while that for silver futures slipped -3 contracts to 41 272. For PGMs, net length for platinum gained +1 609 contracts to 38 470 while that for palladium climbed +2 542 contracts to 15 646.

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Oil and Gold Reports contributed by Oil N' Gold

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