Forex News | Currency News by Forexlive

GMAC got a Christmas present from the Feds. They were granted bank holding company status, making them eligible for TARP funds. US equity futures and GM shares are firmer as a result of the move.

Japan had a string of very downbeat data overnight while retail sales anecdotes for the US suggest a sluggish holiday sales season.

Industrial production in Japan tumbled in November, falling 8.1%, the fastest pace since the early 1950s. Unemployment rose to 3.9% while house hold spending dropped.

In the US, the Spendingpulse credit card data suggest the holiday season may have seen a decline of 4% over year-ago sales. Given the repeated claims that this is the deepest recession since the 1930s, a pullback of 4% doesn’t sound so scary.

EUR/USD is about a penny firmer from Christmas eve levels while USD/JPY is virtually unchanged at 90.40. EUR/JPY is firmer, as a result, up to 127.20.

Gonna wrap it up a bit early today. Posting will resume Friday morning, but it will likely be light. Have a wonderful Christmas!

The greenback is getting a bit of a lift in late, holiday-thinned trading. US data this morning was a mixed bag with jobless claims higher than expected but durable goods orders less dire than feared. Personal income and spending were weak. Year-end interest rate pressures may be prompting some short-covering by dollar bears as rates have been known to spike over the turn of the year in the past. In this era or ultra-loose Fed policy, it is hard to imagine the Fed not keeping the market very liquid over the New Year, but markets appear cautious nonetheless.

EUR/USD has eased to New York session lows at 1.3960. Support is down at 1.3915/20. USD/JPY offers remain in place on the approach to 91.00. We trade now at 90.70.

Energy security in Europe is at the forefront once again as Russia threatens to turn off gas supplies to Ukraine on January 1 unless a disputed debt is repaid. The euro weakened the last time Russia cut off Ukraine as Western Europe imports a significant portion of its natural gas from Russia.

Along with the slide in oil prices, record-low mortgage rates could help spark a recovery during 2009.

US interest rates may be near zero for overnight funding but there is a bump in the yield curve as banks stockpile cash for the turn of the calendar year. Spot/two-week depos are 90 bp versus overnight funds around 10 bp. Short-term funding pressures may give the dollar a very slight bid tone through the holiday period.

Markets are very steady with EUR/USD treading water at 1.3995/1.4000 and USD/JPY at 90.50.

It’s not exactly clear from the headlines though it looks as though AIG has hit up the Fed for more aid. Maiden Lane III, a vehicle set up by the NY Fed purchased $16 nln more in CDOs from AIG while a number of credit default swaps were terminated. At first blush, it looks like another trip to the Federal trough for the struggling insurer. Not good news for the dollar.

UPDATE: Here is the Journal’s take.

GDP fell 0.1% in October but the dip was less than the 0.3% expected.

Durable goods orders fell only 1.0% versus expectations of a 3.0% drop while weekly jobless claims jumped to 586,000 versus expectations of a rise to 560,000. Non-defense capital good, the core of the durable goods report, rose 4.7%, a rare bright spot and may keep GDP from falling off the table in Q4.

Personal spending fell 0.6% versus a 0.7% expected fall while personal income fell 0.2% . Not too much here to stir animal spirits as a long, slow slog looks to lay ahead of us economically in the first half of 2009.

The buck is a shade firmer versus the euro at 1.3990 and USD/JPY is little changed at 90.40. stock futures are mildly positive.

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