• Reclusive President Kim Jong-il dies, aged 70
  • Bank of England quarterly bulletin released
  • German FinMin: Germany may pay full ESM contribution in 2012
  • ECB Draghi: Important that ECB sticks to its mandate
  • ECB Stark: Resigned chief economist role due to disagreements over bond buying
  • Rightmove UK house data shows prices rose by 1.5% in 2012
  • New Zealand Q4 consumer confidence 101, down from 112 in Q3
  • Market expecting an S&P downgrade of France sometime this week
  • Latest Chinese house price data shows declines in 49 cities, rises in 5
  • Regional stockmarkets fall by almost 3%
  • Gold $1592/oz, Silver -2%, Oil $93/bbl

Moderately busy session, considering that it is the lead up to Christmas. Risk-aversion was in play early on, with the spectre of the French downgrade weighing on the market as indeed were more worries about the falling momentum in the Chinese economy. Reports that Kim Jong-il had died, sent stock markets lower and USD/Asia higher, and this sentiment washed over into the majors.

AUD/USD opened near .9980 and has fallen by 1% through the session. The initial losses were on the back of the general risk-off sentiment as well as reports that the Chinese property market is turning lower. It fell to .9930 and then bearish momentum increased on the Korean news. Solid bids near .9900 held on a number of occasions but dealers did manage, barely, to trigger stops just below .9900. Ranges: .9896/.9988

EUR/USD followed a similar pattern to the AUD. It managed some minor gains in early trade, on the back of reports quoting German FinMin Schaeuble as saying that Germany may pay its full ESM complement in 2012. The comments from Draghi, downplaying any possibility of ECB bond-buying, plus the continued sense that S&P will downgrade France, soon erased any bullish momentum. Going was very slow until the North Korean developments saw EUR/USD fall swiftly below 1.3000. Ranges: 1.2984/1.3043.

USD/JPY, unusually, saw a quick 40 pip spike on the developments in North Korea but risk-aversion has proven the more potent force and USD/JPY will end the session about 10 pips higher overall. Solid corporate offers at 78.25 are still dissuading the bulls. Ranges: 77.71/78.15

Cable 1.5463/1.5543; USD/CHF .9357/99