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Natural Gas Update

Natural Gas was already trading at lows, and plummeted 20 cents to 5.57 after storage showed a smaller drop than expected. Natural Gas has recovered somewhat but is still down 2.8% at 5.719.

European Midday Report

The main focus in morning trading is the forthcoming announcement from the Bank of England (1200GMT) on an expected bank rate cut. Opinion is divided three ways between 50bps, 75 and 100bps on the Bank's likely course of action, with a majority favouring the first of those options. Sterling came under some pressure earlier but held relatively steady later in the morning at around $1.5052 and 0.9003 vs. the Euro.Â The Euro was also little moved against the dollar 1.3572 after figures from the German EconomicsÂ ministry showing a near-collapse in industrial orders, down six per cent in November month on month and a whopping 27.2 per cent year on year. Elsewhere, Dollar/JPY 91.60. European equity markets held barely steady in generally quiet conditions with the Footsie 0.99% lower and the DAX yielding 1.2%. Â Forecasts are for the Dow Jones Industrials to slip at the opening, possibly by around 30 points to 8739Â with the SP 500 off 3 to 903. European debt futures are moving up with gilts outperforming ahead of that Bank rate announcement. Bunds wiped out earlier losses on the back of those industrial orders numbers. The March 10 year Bund future is up 23 ticks on the day at 123.09 while the corresponding gilts future is up 46 ticks at 121.40. In the cash market the 10 year Bund yield is off 3 bp at 3.15% and the gilt yield is down 3 bp at 3.24% Oil prices rose in the face on Middle East fighting. The February Nymex rose 39 cents a barrel at $43.03. Gold traded with an offered bias, sliding to $834.50 inÂ Asia before recoveringÂ to around $850 in morning European dealings. Â Â Â Â Â Â

FX Midday: Europe

The European morning was influenced by risk reduction after equity markets continued to trade at softer levels. JPY and CHF traded on a firmer footing versus the dollar, which added weight on the crosses. EUR/CHF traded below 1.4950 and EUR/JPY moved towards 124.00 amid good Japanese lifer selling reportedly linked to eurozone bond redemptions. Elsewhere, EUR/USD was weighed on amid good cross flows and softer Eurozone data, but managed to find a base after recording early lows of 1.3536. Yesterday weak US ADP employment continued to highlight the difficult US economic conditions, which hampered dollar buying momentum. The heaviness in the euro crosses led to more Cable volatility, with EUR/GBP trading underneath 0.9000, which kept Cable above 1.5000 despite an early test lower. The market will towards the BOE rate decision, where a cut of at least 50 bp is expected, but uncertainty remains high.

City AM's Pertinent Press

Royal Bank of Scotland, the cash-strapped UK lender, is considering selling its Â£2bn stake in Bank of China amid a scramble by foreign investors in mainland banks to cash in their lucrative holdings, says the FT. Ministers admit the Government may need a second fiscal stimulus to keep the economy moving because the recession will last longer than the Treasury predicted. Alistair Darling, the Chancellor, may extend the Â£20bn stimulus he announced only six weeks ago when he delivers his Budget in March or April, reports the Independent. ITV will today announce it has signed its largest ever syndication deal, giving 3.5m Virgin Media customers' on-demand access to popular shows such as Coronation Street and Emmerdale, the Telegraph has learnt. Sir Stuart Rose has called for greater consistency and clarity from the Government on how it deals with the consumer downturn. The executive chairman of Marks & Spencer said that the Government needs to "stick to its story" and not issue "stop-start" policies that could confuse consumers, writes the Telegraph. The European Central Bank is showing few signs of succumbing to mounting calls to slash interest rates at its critical monetary policy meeting next week and now appears more likely than not to leave them unchanged or modestly reduced, according to the FT. Viyella, one of the oldest names in the British clothing industry, has joined the victims of the recession. Its womenswear section went into administration, though other parts of the business are still trading, says the Independent. Car industry chiefs are going directly to the banks for help as doubts grow over a government bailout. They are also turning to small business support schemes and regional development agencies in a desperate effort to secure more money for the industry, reports the Times. Fears that governments may not be able to fund their vast borrowings over the next few years without a rise in interest rates were fuelled yesterday as a major auction of German government bonds failed. The German authorities only managed to sell two thirds of the â�¬6bn (Â£5.4bn) of 10-year maturity securities that they offered to the market, writes the Independent. The Government set out part of the agenda for April's global economic summit of the G20 nations yesterday, stressing the need for "tougher global financial regulation", according to the Independent.

FX Summary: Asia

The dollar continued to add to gains in Asia after recovering ground in NY on Wednesday. The fall in US stocks and subsequent losses in Asian stock markets fueled risk aversion, keeping pressure on JPY crosses and weighing on currencies such as AUD, NZD and GBP. AUD & NZD also succumbed to the pressure of lower commodities after the CRB slide over 3% Wednesday and the 12.2% slide in oil and fall in gold prices. Oil saw little change in Asian trading though gold bounced in a correction but base metals were broadly lower. USD/JPY was pressured by the fall in crosses as the Nikkei dropped 3.93%. The weak US Monster jobs index at 131 continued to fuel fears over US employment and kept USD/JPY heavy too with a fall to 92.38 from morning highs of 92.93. EUR/USD fell to lows of 1.3559 but recovered to 1.3635 on an FT report suggesting the ECB may not cut rates and a NY Times report that China is losing interest in US debt.

Natural Gas Update

Natural Gas sold off overnight and plunged through support at the $6 handle during premarket trading. Buyers tried to send it higher right before the open, but the $6 handle (now resistance) held, and Natural Gas continued to decline in the first half hour of floor trade. Currently, Natural Gas is down 0.3% at 5.903.

Gold in 2nd week of 200d mvg avg challenge; pivotal Gold trend developing

February Gold has repeatedly challenged the 200 day moving average over the past 8 days.Â On 2 of those 8 days the entire day's range was above the 200d moving average but in both instances there was not a strong close above the average.Â On 12/29 Gold sent a strong sell signal but the market did not follow thru and the FEB contract has kept withing striking distance of the 200 day moving average and is now in a position, with short and medium term moving averages below price, to move into a strong bullish rally. Volume is building and as the greenback takes a beating...gold should rally over and extend well beyond the 200 day moving average.Â NB, FEB gold is also trading in and around the 50% retracement of the $1045 to $688 sell-off.

TSY 3yr Auction Preview

The when-issued 3-year note is trading in the 1.18% area. That's up 6bps versus yesterday and off a low of 0.963% from Monday. The cheapening of the issue should help elicit some demand as dip buyers have been seen in recent action. The notes are also relatively cheap on the curve. The December 3-year note auction was well received with a 2.15 bid cover and a 35.3% indirect bid. It will be interesting to see how much more appetite investors, especially foreign investors, will have for Treasuries as the government will be cramming paper down our throats with some sort of coupon auction almost weekly for the rest of the year, and likely through 2010. Note the Treasury is also selling $35bln in 70-day cash management bills at 11:30 ahead of the 3yr auction at 1:00pm.

Alpha Trading Systems secures market position with TNS

January 7th, 2009 - Alpha Trading Systems connects to Transaction Network Services

Thomson Reuters expands reach of its Order Routing network in Latin America

January 7th, 2009 - Four key brokers from Brazil and Mexico join Thomson Reuters' order routing network