Euro trade calm as many speculators focus on oil colorations currencies

Good Morning,

- Euro trade calm as many speculators focus on oil colorations currencies, Canadian dollar, Norwegian crown under pressure as oil slides.

- The U.S. dollar rising against commodity currencies such as the Canadian dollar and Norwegian crown on OPEC's decision not to reduce output. The dollar rallied to 6.9570 crowns, a high not seen in over five years.

- Falling prices in Oil are also problem for the ECB, as the euro zone is on the verge of slipping into deflation. Weak inflation data in Germany and Spain raised the chance that the euro zone reading due later on Friday could undershoot expectations. The soft outcomes in Germany and Spain suggested the risk of deflation in the wider euro area had not yet abated, putting pressure on the ECB to ease further.

- In UK the annual pace of house price growth continued to soften in November, falling from 9 .0 % in October to 8.5% , marking the third consecutive month where annual growth has moderated . This is despite house prices increasing by 0.3 % month on month in November .

- BNP Paribas on EUR: All eyes will be on the ECB meeting on Thursday following comments from the Governing Council, which have been mixed, but key members, including ECB president Mario Draghi, vice president Vitor Constancio and Benoit Coeure, have sounded amenable to further policy adjustments, notes BNP Paribas. "Our economists expect next week’s meeting to include the announcement of a broadening of the range of assets the ECB intends to buy in tandem with a downward revision to already-low staff inflation projections. Comments should support an increase in expectations of full sovereign QE in Q1," BNPP projects. "We expect the outcome of the meeting generally to be bearish for the EUR, even though a more significant depreciation probably requires a marked rise in inflation expectations," BNPP adds. "We remain short EURUSD and EURGBP heading into December," BNPP adds. In its portfolio, BNPP maintains a short EUR/USD position from 1.2520 targeting 1.18 and a short EUR/GBP position from 0.7990 targeting 0.7757.

- OPEC’s decision to cede no ground to rival producers underscored the price war in the crude market and the challenge to U.S. shale drillers. The 12-nation Organization of Petroleum Exporting Countries kept its output target unchanged even after the steepest slump in oil prices since the global recession, prompting speculation it has abandoned its role as a swing producer. Yesterday’s decision in Vienna propelled futures to the lowest since 2010, a level that means some shale projects may lose money.

- Russia will sink into recession at a Urals price of $80 a barrel, seven years after its economy grew 8.5 percent when its chief export oil blend averaged near $70, according to a Bloomberg survey of analysts. Urals at $80, or about $3 cheaper than its average in the month through November 15, will tip Russia into a contraction, according to the median estimate of 32 economists. The probability of a recession in the next 12 months rose to 75 percent, the highest since the first such survey more than two years ago, according to another poll.

- Russia, which receives about half of its budget revenue from oil and gas taxes, is closing in on its first slump since 2009 after dodging recession this year as it lurched from one crisis to another following the takeover of Crimea from Ukraine in March. Consumer spending, which accounts for half of the $2 trillion economy, is failing to make up for lost revenue with oil mired in a bear market amid concerns over a global glut.

- Japanese industrial production rose for the second straight month in October, up 0.2% from the previous month, as exports in some sectors grew while the impact of the sales tax increase in April was slowly wearing off. The rise was better than a 0.6% fall expected by economists surveyed. The rise follows a sharp 2.9% gain in September.

- Many eyes this weekend will be on Switzerland, as voters on Sunday will decide if the central bank should hold more gold in its reserves. The market has already been testing a cap on the Swiss franc at 1.20, which the central bank has successfully defended since 2011. The Swiss National Bank has warned it may not be able to continue doing so should the 'yes' vote win.

- Watch today: Euro zone inflation trend, German retail, UK housing.

Have a nice Weekend !