Intraday Market Thoughts

Chicago PMI warns USD bulls ahead of ISM & ADP

May 29, 2015 16:38 | by Ashraf Laidi

The six-point drop in today's release of the May Chicago PMI to contraction territory at 46.2 doesn't augur well for next week's release of the manufacturing ISM and NFP figures. The situation is different from last February when a similar thing occured.  Full charts & anlaysis.

The Focus is on Japan After FX Warning

May 28, 2015 23:00 | by Adam Button

It may be true that most countries want a bit of FX weakness but there is a limit. Japan is beginning to show signs of strong growth and the USD/JPY rally abruptly ended Thursday on an FX quip from Fin Min Taro Aso. On the day, CHF led the way while the antipodeans lagged. The focus will remain on the yen with a slate of top-tier economic data up next.

It's been a generation since markets have had to deal with a strong Japanese economy and at the moment, the reaction is total skepticism if not disbelief. But Japan has strung together a few good months and the consensus for 2015 growth has moved close to 2% from 0.9% at the start of the year.

We don't know if Abenomics is really working but Japanese officials have maintained an upbeat outlook and talk of more QE has fallen to the wayside. If they believe they can achieve solid growth – which is anything close to 2% in Japanese terms – then they might believe USD/JPY at these levels is high enough.

The pair hit an airpocket on Thursday when Aso said recent currency moves were rough and that he will monitor forex moves carefully. USD/JPY quickly fell to 123.63 from 124.10 in the aftermath. We warned yesterday about the possibility of this type of comment and it will continue to be a risk in the pair.

Like the US, the outlook for the yen is data dependant. On the docket next is the jobs report and CPI at 2330 GMT, followed by industrial production 20 minutes later. National CPI is expected up just 0.6% in April so there is no immediate danger of nearing the 2% BOJ target.

April IP is expected up 1.0% m/m.

 In today's Premium Insights, we added a EURAUD trade with 3 charts, currently +50 pips in the money.
Act Exp Prev GMT
National CPI (APR) (y/y)
2.3% May 28 23:30
National CPI Ex Food, Energy (APR) (y/y)
2.2% May 28 23:30
National CPI Ex-Fresh Food (APR) (y/y)
0.2% 2.2% May 28 23:30
Tokyo CPI (MAY) (y/y)
0.7% May 28 23:30
Tokyo CPI ex Food, Energy (MAY) (y/y)
0% May 28 23:30
Tokyo CPI ex Fresh Food (MAY) (y/y)
0.1% 0.4% May 28 23:30
Industrial Production (MAY) (m/m) [P]
0.8% -0.8% May 28 23:50
Industrial Production (MAY) (y/y) [P]
-1.7% May 28 23:50

China stocks tumble, Aussie capex crumble, oil supported

May 28, 2015 17:21 | by Ashraf Laidi

The 7% plunge in Shanghai Composite forms a weekly gravessone doji as PBOC withdraws liquidity, while Aussie capex crumbles, opening the door for a summer RBA easing. Full chart & analysis.


USD/JPY Flirts With Critical Level

May 27, 2015 23:51 | by Adam Button

A day of consolidation wouldn't have been a black mark for the US dollar but it shrugged off earlier losses and rallied in New York trading. On the day, the kiwi and Swissy were the top performers while the yen lagged. Japanese retail sales and Australian capex numbers are due later.

USD/JPY stormed ahead once again on Wednesday before it finally ran into resistance. The late-day high was 124.07, just shy of the 2007 top at 124.14. A break above that would be the best level for the pair since 2002.

Initially at least, that level proved to be solid resistance and some profit-taking pushed the pair back to 123.69. At such a critical long-term level, unless there is a resounding rejection in the next day or two, it points to a break. One space to watch closely is the G7 finance ministers meeting in Germany. If Japanese leaders signal that they don't want further yen weakness, the trade could turn around.

Overall, it was another day of broad gains for the US dollar. In European trading, it looked as though the dollar may sag and consolidate the gains of the past week but instead, it continued to power higher. One exception was against the euro after chatter from Greece that a deal with creditors was close.

Early in Asia, more headlines indicated the sides were nearing agreement and when there is smoke, there is probably fire. But after 6 years of Greek drama, we've learned to never trust a headline and be prepared for anything.

Due up later, it's Japanese retail sales for April at 2350 GMT. The consensus is for a healthy 5.4% y/y raise as we finally get past the skew from the consumption tax increase.

Afterwards, at 0130 GMT, it's the Australian Q1 capex report. The Q42014 report showed a 2.2% fall compared to 1.6% expected and that marked the top in AUD/USD for the next month. This report is expected to show a further 2.4% q/q decline.

Act Exp Prev GMT
Retail Trade s.a (APR) (m/m)
-1.9% May 27 23:50
Retail Trade (APR) (y/y)
5.4% -9.7% May 27 23:50

أسباب الارتفاع الهائل في الدولار الأمريكي أمام الين

May 27, 2015 18:37 | by Ashraf Laidi

بعيدًا عن الأرقام الأمريكية الإيجابية التي فاقت التوقعات، لعل السبب الأهم في الارتفاع الأخير بسعر صرف الدولار الأمريكي أمام الين يعود إلى أحدث تقرير صادر عن صندوق النقد الدولي عن اليابان، مطالبًا فيه اليابان بالمزيد من التيسير الكمي. جاء في تقرير صندوق النقد الدولي ما يلي المزيد: