Daily Market Review 27 of December
The market closed in another loss Wednesday as trading resumed following the Christmas vacation. Stocks sold off for nearly the entire session on a very light volume. It appears traders are in no hurry to get back to markets after the Christmas, and most likely waits for more definitive word about fiscal cliff negotiations.

U.S. President Barack Obama will try to revive budget crisis talks which stalled last week when he returns to Washington on Today after cutting short his Christmas holiday in Hawaii.

The housing markets in the US continue to make headlines. In a report yesterday, the S&P/Case Shiller composite index of 20 metropolitan areas gained 0.7 percent in October on a seasonally adjusted basis, stronger than the 0.5% rise forecast by economists polled by Reuters. This numbers represents a prices increase of 4.3% year over year, beating expectations for a rise of 4.0%.

At the open of the trading session today, Asian stock markets moved higher with shares in Tokyo surging to the highest level since March 2011 on the back of a weakening yen, which fell to a more than 21 month low against the U.S. dollar on back of Japans new Prime Minister Words and actions.

The European stock market opened mixed today after returning from a 2 days vacation following the Christmas and the Boxing Day.

Later in the day, the U.S. was to publish its weekly government report on initial jobless claims, as well as data on new home sales and consumer confidence.

Despite economic data that are expected in the next few days, Market players will remain focused on developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.

Asset in Focus

USD/JPY the Yen is trading in a 21 month low against the USD amid expectations for more aggressive monetary stimulus from the Bank of Japan following the approval of Shinzo Abe as the country’s next prime minister.

The new Prime Minister Shinzo Abe was expected to announce his cabinet lineup later in the day. Abe criticize the Bank of Japan citing “the BoJ has been insensitive to the problem of deflation' and he called for unlimited easing by the Bank of Japan in order to weaken the local currency and spur growth in the recession-hit economy.

From a technical perspective, above its current level 85.6-86 it will continue higher to 92 and 96.

If it fails to overcome its current level (highly unlikely) it will went down to check 80 again.