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As is often the case, a busy week starts off relatively quietly in terms of the statistical schedule, with Sunday's $20 Bln jump in Chinese December FX reserves and the just published German Factory Orders likely to be the main points of interest, while ahead lies the EC's various Eurozone Confidence surveys and US Consumer Credit. A busy day for Fed speak sees a speech from Atlanta Fed's Bostic, and the hawkish leaning Williams and Rosengren both speaking at the Brookings Institute debate / conference on inflation targeting. In terms of the modest m/m miss on German Factory orders, this was paced by a drop in Foreign (non-Eurozone) Orders (-2.3% m/m), but follows a run of forur months of gains ranging between 1.6% m/m and 5.2% m/m, as such this is no more than a mean reversion, and the fact of the matter is that the y/y rate at 8.7% y/y was both higher than forecast (7.8%) and robust by any standard. As for the $20.1 Bln in China's FX reserves, the key point is that this mirrors a broader rise in global FX reserves thanks to the pick-up in global trade, and naturally leads to diversification flows, above all into EUR - and this has been a key contributor to the USD's weakness. The simple lesson from this is that solid growth in global trade tends to be a negative for the USD.
from Marc Ostwald