Reports on weekly jobless claims and durable goods could make Thursday morning the busiest trading session of the week, but a shortened day for bonds and commodities markets could quickly turn the session into a sleeper.
U.S. traders will continue to watch for headlines from Europe, though there may be fewer news alerts ahead of the Christmas Eve holiday. The euro [EUR=X 1.3105 0.0008 (+0.06%) ] Wednesday held its own against the dollar, but sunk to a record low against the Swiss franc [EURCHF=X 1.247 0.0004 (+0.03%) ]. The euro set a new low below 1.25 and was at 1.2466 late Wednesday.
"Right now, the path of least resistance is to the downside. The euro is really feeling this pressure against the Swissie," said Boris Schlossberg of GFT Forex. The flight-to-safety play could push the currency even lower against the franc but the trade may be getting overdone, he said.
The Greek parliament late Wednesday adopted its 2011 austerity budget, and there was a report in the Irish Times newspaper Wednesday evening that the Irish government may be preparing to pump 3.7 billion euros into Allied Irish Banks.
"It feels like all of Europe is crowding into the Swiss franc at this point. It's a tiny little economy. It can't absorb all these capital flows," he said, noting the Swiss National Bank may be waiting until after the holidays to intervene.
Schlossberg said the flight to the Swissie highlights the lingering concerns that Europe has not provided a structural solution to its sovereign debt problems, and next year, there will be a new round of sovereign issuance that will test the markets. "Spain is the big elephant in the room because it has massive refinancing needs," he said.
"The real white knight might be China," he said. China has indicated it will support the EU's efforts to stabilize markets with purchases of sovereign debt. "The Chinese have no interest in having the dollar be the sole reserve currency. They want to do everything in their power to have a multipolar regime."
Stocks on Wednesday continued their slow drift higher, with the Dow [.DJIA 11559.49 26.33 (+0.23%) ] gaining 26 to 11,559, and the S&P 500 [.SPX 1258.84 4.24 (+0.34%) ] up 4 at 1258. Bonds traded lower, with the yield on the 10-year rising to 3.342 percent.
Wednesday's data included a revision to third quarter GDP, which came in at 2.6 percent, below the 2.9 percent expected.
"The GDP number was really softer. It should have helped us. It really didn't. I think the market is just trading softer because of the pending supply and the fact the (Fed) buybacks are out of the way," said Rick Klingman, managing director of Treasury trading at BNP Paribas.
Next week, the Treasury auctions $99 billion in 2-, 5- and 7-year notes. Klingman said the market is watching Thursday's data with interest. Bond futures close at 1 p.m., and the bond market closes at 2 p.m.
"In a thin market, with some important information, if it comes way out of consensus, it definitely could move things," he said.
Weekly jobless claims, durable goods, and personal income and spending are reported at 8:30 a.m. Consumer sentiment is released at 9:55 a.m., and new home sales are released at 10 a.m.
Crude oil Wednesday gained $0.66 per barrel to finish at $90.48, its highest close since Oct. 7, 2008. For the month, oil is up 7.6 percent, and year-to-date, it's up 14 percent.
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