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I am stalking this trade like a tiger. Watch the wedge on the daily chart in USD/CAD. When it breaks, expect a 600-700 pip move. For confirmation, check the similar chart in copper.

My bias is to the upside because my base case for 2012 is disappointing growth. A multitude of political pitfalls remain and the commodity bull market has gone limp.The BOC has room to cut rates while the Fed is reluctant to implement QE3.

That said, I’m keeping an open mind. Corporate profits have been solid and the US economy could pull it together for 3-4 months. That would send USD/CAD to 0.96/0.97. Either way, I’m going with a break on the chart.

• Officials say Congressional leaders have requested to delay the vote on hiking the debt ceiling, due to scheduling
• They say the Treasury can avoid hitting the ceiling with accounting shuffles

The laws were changed to make the upcoming a hike in the ceiling automatic. Congress would have to vote to disapprove it, which Obama said he would veto anyway.

US DATA: Dec farm prices -4.3%.

As New York heads to lunch (will they even come back?) and London signs off for the year we are seeing some retracement. I expect we’ve seen the full ranges for the day and the rest will be consolidation.

EUR/USD fall to 1.2970 after failing to break 1.30.

It’s time to start making some 2012 predictions. What are yours? Here are some from Goldman to get you warmed up.

DAX closes up 0.9% today to end year down 14.7%

CAC-40 up 0.8% to close year down 17.8%

The FTSE 100 closed earlier, up 0.1% on the day and down 5.7% on the year.

More stocks annual stock performance numbers here.

Here’s a chart on asset returns in 2011. EUR/CHF and USD/JPY are wrong (maybe backwards?) but the rest of the list looks correct.

• EUR/CHF just fell to 1.2148 (a great level to buy IMO)
• USD/JPY plunged below 77.00
• AUD/USD surged to 1.0246
• EUR/JPY back below 100.00
• It’s clearly fixing demand/flows

USD/CAD has held steady at 1.0182 but if this holds up, it should fall.

It’s not non-farm payrolls, retail sales or the ISM surveys.

The market goes through phases where it decides to focus on one thing or another. Right now it’s daily overnight lending at the ECB. The data is published on the ECB website at 8:10 GMT from Monday to Friday on the line “use of deposit facility”. Last night, deposits hit 445B vs 436B the day earlier.

There are worries that banks are hoarding the LTRO funds in overnight deposits because they didn’t go into yesterday’s Italian debt sales, as hoped.

The question is: is this a function of year end? Or is the funding market so strained that banks won’t lend to each other?

Next week, if deposits fall and the money goes to work, EUR should rally. If deposits rise or stay the same, EUR will fall.

IMF data shows the buck’s share of global reserves up 7.5% y/y in the third quarter. The euro lost ground. Another reason to be short EUR/USD in 2012.

US DATA: Fed has released Maiden Lane updates showing the latest paydown
amounts. See http://www.newyorkfed.org/markets/maidenlane.html#tabs-1

The next person to make a trade based on this indicator will be the first. On manufacturing, the latest forecast has Tuesday’s ISM at 53.2 vs 52.7 in Nov.

Non-farm payrolls forecasts are being revised higher with the consensus now at +150K.

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