Wednesday, December 06, 2006
* The P/L has taken a hit overnight as equity markets continue to perform strongly. Blogger is once again having upload problems, so Macro Man cannot post the usual update at the moment, but the strong start to the month has now dwindled to zero. If the ECB tomorrow and employment data on Friday do not prompt a correction, another option overlay may be required to decrease the short beta temproarily.
* The dollar has staged a mini-recovery this morning against the euro, as profit-taking and a breach of reputed central bank bids has let to a retest of the November closing rate. However, further CB bids reportedly lurk below, so Macro Man will take advantage of this dip at 1.9645 (1.9648 to Jan 4) to buy the £10 million versus USD that he thought about yesterday. Interesting comments from the French small business minister: "France must stop moaning about the euro." Too right!
*Aussie GDP disappointed overnight, registering a quartely gain of 0.3%. However, the revisions to prior data suggest that the Q3 number was not quite as weak as the headline would suggest. Nevertheless, this is another in a string of Q3 data that suggests that the rest of the world has yet to decisively decouple from the US economic soft patch.
*Iceland reported a Q3 current account deficit equating to an annualized rate of 24% of GDP. Could this be a catalyst that the current account trade is going to come back into vogue? Macro Man cannot help but notice that NZD is underperforming badly today. Macro Man is coming very close to pulling the trigger on a sale of NZD/JPY.