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GLOBAL Stocks Bonds Commodities Forex Wrap Midday GMT December 22: Quiet Pre-Holiday Trade In Stocks, Commodities But Forex Shows Risk Appetite, Cotton Volatile

Overview: No clear bias to risk or safety assets over the past with stocks mixed/flat thus far today and commodities overall mixed/flat as well with few exceptions.
Remaining event risk for the week comes from the US Wednesday (Existing Home Sales) and Thursday (Durable Goods, New Home Sales)
WARNING: Avoid pre-holiday thin liquidity trading scams. It is exceptionally hard to profit during the final weeks of the year as low liquidity means either:
·         If there is no major news: flat, tightly bound range trading with little room for profits
·         If there is major news: Sudden violent and unpredictable price movements due to a lack of buyers or sellers to absorb the selling or buying.
Therefore we at Avafx advise using the time to plan trades and avoid opening new positions. Keep stop loss orders on any short term positions left open.
STOCKS: US: Up -  On Monday the major US indices followed through on Asian and EU gains based on easing Korean tensions and EU supportive remarks from China’s Vice Premier. The major US indices were generally higher about 0.5%, rising for the 10th time in the past 11 sessions to new 2011 highs that exceeded their Pre-Lehman-Brothers-Collapse Highs.
US Bonds: Down- 10 Year Treasury Notes rose Tuesday, lowering the 10-year yield from 3.3490% on Monday to 3.3260
Asia Stock Outlook: Mixed/Flat – Most major Asian stock markets closed with minor gains or losses on thinning trade and little news, the Nikkei and Shanghai bourses closed lower.
European Stock Outlook: Mixed/Flat – European bourses have mostly bounced slightly above and below yesterday’s closing prices, repeating the mixed/flat quality of the Asian session as stocks stay near their 2011 highs.
Commodities Outlook Tuesday To Midday GMT Wednesday: Commodities Overall Following Risk Appetite Flat Over The Past 24 Hours: Cotton, Copper
Gold, silver: Flat/lower – Gold futures slightly below yesterday’s close, silver unchanged.
Crude oil: Up – Futures continuing to climb modestly since Tuesday’s close, and have advanced about 5% since Friday with most of those gains coming Monday on colder weather and continued evidence of firming demand and shrinking inventories. Continued bias to risk assets.
Copper hitting new highs on temporary supply troubles at major Chilean mines. Note that copper is considered a key indicator of economic activity, thus its strength is bullish for risk assets.

ALERT: The Wall Street Journal reports that an unnamed trader has managed to stockpile about half of the tradable physical copper supplies. The news is of concern to commodity traders as another sign that a few large traders are showing signs of being able to manipulate markets.
Grains & Softs: Wheat down modestly, cotton down hard and giving up nearly all of yesterday’s 6% move higher, soybeans, coffee, sugar modestly higher.
FOREX Daily Outlook Tuesday To Midday GMT Wednesday: Bias to risk currencies with some exceptions as commodity dollars show strength, though the CHF remains the strongest for the second straight day.  Strongest gainers over the past 24 hours: CHF, AUD, NZD. Weakest: GBP, USD, JPY.
US Dollar Daily Outlook: Down vs. all except the GBP. US Housing, durable goods, and weekly jobs figures today and tomorrow provide most of the remaining significant scheduled event risk for the week
Euro Daily Outlook: Up vs. the USD, JPY, GBP and gaining more ground thus far today, down vs. the CHF and commodity dollars
Despite the vaguely supportive comments of China’s Vice Premier Tuesday the EUR was pressured by multiple credit agency warnings. Moody’s warned of a coming possible downgrade to Portugal and Fitch warned on Greece. Spain held a bond auction that saw steady demand but higher yields
Yen Daily Outlook: Down vs. all except up vs. the USD and GBP, pressured by a combination of a ‘risk-on’ atmosphere over the past day and downbeat BoJ assessment of Japan’s economy and dovish remarks that short term rates need to stay low for a long time.
British Pound Daily Outlook: Down vs. all. A surprise increase in public sector borrowing, suggesting that the UK’s financial condition is worsening at a faster pace, has pushed the GBP lower. Health care, defense, and debt service spending were all higher, despite ongoing austerity measures, suggesting this month’s figures might be an aberration, as the coming year should show slowing spending and rising revenues from the new VAT tax
Today’s higher than expected current account figures add to the dour UK picture.
Australian Dollar Daily Outlook: Up vs. all except down vs. the CHF on the general rise in risk appetite as there was no AUD related news yesterday, though rising metals prices don’t hurt.
New Zealand Dollar Daily Outlook: Up vs. all except down vs. the CHF and AUD on the overall rise in risk appetite over the past day, not on any specific news. Rising agricultural commodity prices may also be a factor.
Canadian Dollar Daily Outlook: Up vs. the USD, JPY, EUR, GBP, down vs. the CHF, AUD, NZD. Tuesday was the big news day this week for the CAD, with lower than expected CPI offset by better than expected retail spending.
Swiss Franc Daily Outlook: Up vs. all over the past 48 hours despite the overall risk-on theme, suggesting there is more fear in the forex than in other asset markets, as the CHF remains the safe haven currency with the best underlying fundamentals in the face of a worsening EU crisis.
The CHF has remained strong despite softer trade surplus figures, continuing to record highs vs. the EUR, much to the consternation of the SNB because this makes Swiss goods less competitive in their primary export market.