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EFSF’s Regling: No current need to expand EFSF fund – Radio

• Spain, Portugal currently able to finance themselves on market, but EFSF funds would be enough for them
• There is a gap to full guaranteed sum that can be filled with new mechanisms
• Likelihood the German budget will profit from lending to struggling states through EFSF is higher than a loss
• Greek measures are going well
• Greece does not need a restructuring of debt

ForexLive Asian market wrap: Chinese CPI as expected at 4.6%

• Yesterday’s leak was correct with China’s latest CPI coming in at 4.6%
• 2010 official GDP +10.3%
• Q4 GDP rose more than expected at +9.8%, maintaining inflationary concerns
• Producer prices rose 5.9% YoY, consumer prices +4.6% YoY
• Reuters Tankan shows Japanese corporate sentiment improving
• Brazil raises rates by 50bps to 11.25%
• NZ CPI +2.3% QoQ, as expected
• Spain to ramp up bail out of banks- WSJ
• Regional stockmarkets fall by just over 1% on average
• Gold steady at $1368/oz

A pretty quiet session all up with the USD regaining a little ground as pairs like cable and AUD/USD retraced off significantly overbought levels.

EUR/USD closed in NY at 1.3465 and has been reasonably quiet in a 50 pip range as traders resign themselves to the fact that some extended range trading might be on the cards. The offers above 1.3500 proved more than capable of soaking up the big stop-loss buy orders and Sovereign names are waiting on the bid in the low 1.33′s; a perfect recipe for range trading some would say. The WSJ article on Spain’s efforts to assuage investors has had no impact. Ranges: EUR/USD 1.3428/76, EUR/CHF 1.2851/82

Cable has been heavy for most of the session with GBP/JPY selling and EUR/GBP buying again to the fore. There were no major developments, so this is regarded as normal market adjustments. Ranges: Cable 1.5922/99, EUR/GBP .8414/44

AUD had expected to be quite volatile given the raft of data coming out of China but with most indicators coming in on expectation, the volatility has stayed away. Range: AUD/USD .9942/1.0008

USD/JPY has returned to it’s usual 25 pip range in Asia. Kampo bids below 82.00 are dissuading the bears but rallies have been shallow as cross-selling continues. Ranges: 81.99/82.24

US-China trade gap not caused by currency

That is according to the Chinese commerce minister Chen in this Bloomberg interview.

Chinese oil demand continues to increase

According to Reuters calculations, China’s implied demand for oil in December was up 19% at a record 9.6 million bpd. These figures give truth to the GDP figures which continue to show strong economic growth.

What does all this mean for the oil price and are we soon to hear those two controversial words “peak oil” uttered much more frequently yet again? A quick google brought up this article from someone who seems to know what he’s talking about.

Spain to ramp up bail-out of banks

The Wall Street Journal reports on extended efforts being undertaken by the Spanish government to reduce investor unease.

(If you can’t read the article, put the headline into Google)

Cable continues to struggle

Cable has fallen 50 pips already during Asia and may be about to fall some more in early Europe as disappointed longs bail out on the inability to hold above 1.6000. The break below 1.5930 opens the way up for further losses and there isn’t much in the way of decent support now until 1.5870.

Around the markets: Stocks fall 1%

The Nikkei, Hang Seng and Shanghai are all -1.2%. Korea and Singapore are -0.5%. Gold is trading at $1368/oz.

The USD is up across the board so far during the Asian session.

Chinese CPI 4.6%, exactly as leaked

2010 GDP was 10.3%, also exactly as leaked.

• December retail sales +19.1% YoY
• December industrial output +24.5% YoY
• December producer prices +0.7% MoM, +5.9% YoY
• December consumer prices +0.5% MoM, +4.6% MoM

The AUD has rebounded toward session highs as the much feared higher-CPI number didn’t eventuate therefore lessening the chances of any rate hikes before the Chinese New Year celebrations start on February 3rd.

Quick look at the order board

• EUR/USD: Light stops below 1.3420 and 1.3400
• EUR/USD: Sovereign buying interest starting at 1.3360, and at regular intervals through 1.3300
• EUR/USD: Offers starting at 1.3510
• GBP/JPY: Good sized stop-loss sell orders below 130.50
• EUR/GBP: Sell orders reported .8450/60
• USD/JPY: Kampo reportedly on bid below 82.00
• AUD/USD: Corporate bids starting at .9910 (raised from .9850 earlier in the week)

Reuters Tankan shows improvement in Japanese corporate sentiment

The Reuters survey of Japanese manufacturing sector sentiment has shown that the index improved to +11 in January from +7 in December. Non-manufacturers was -2 from -12 the previous month.