Intraday Market Thoughts

Archived IMT (2011.01.25)

by Ashraf Laidi
Jan 25, 2011 11:46

GBP DAMAGED AFTER SHOCK GDP CONTRACTION of 0.5% in Q4 vs forecasts of +0.5%. 10 yr UK gilt yields dropped 13 bps and UK-US 10- yer differential drops by 8 bps to +0.20, lowest since Jan 7th. LOOKING BACK AT MAJOR CABLE DAILY DECLINES, these have averaged around 250 to 280 pips (from day high to low) . The LAST TIME CABLE fell by more than 300 was on May 13. THE TIME BEFORE THAT was on May 6 (Election Day & FLASH CRASH DAY). Ive already mentioned yesterday that the last time the Dow had 8 consec weekly gains was right before the week of the Flash crash. So you can make your own conclusions. Rarely has GBPUSD fallen by more than 250 pips in one day without following up w/ further losses in subsequent days. With Mervyn King speaking later today at 19:40 GMT, he could cause further losses in GBP as he reiterates his case against interest rates hikes, which many have begun calling for following the 3.7% CPI seen 2 weeks ago. BOTTOM LINE: GBPUSD seen extending losses towards the 1.5720 (55-day MA), with next key target standing at $1.5660 (100-WEEK MA). Subsequent target is the major trendline support at $1.5570.80. i will be on ARABIYA TV today at 12:40 GMT; 16:40 Dubai Time. **** If you havent done so, please consider VOTING FOR ME ON TWITTER for the SHORTY AWARDS at (Please state a reason so that your vote counts). ******


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