Intraday Market Thoughts

German PPI on the High Side, GBP Turns to Finances, Latest Trades

by Kyle Morrison
Aug 19, 2011 7:00

UK Public finances for July expected to improve, German PPI higher than expected, Canadian CPI expected to slide back. All of Thursday's 9 Premium Trades have been executed.

Fears about a global recession have increased in recent days on the back of some growth downgrades, and the inability of policymakers to get ahead of the current crisis; both in Europe and the US. Attention today is on options expiries, as well as some more data out of Europe and the UK.

After yesterday'ss disappointing UK retail sales numbers failed to dent the pounds recent rise, attention turns to the UK's deficit reduction measures and the public finances for July. Expectations are for borrowing to come down to 0.3bn in July, from 12bn in June. This would be a great opportunity for the figures to move back into line after the disappointing numbers we have seen thus far this fiscal year, where the recent numbers have shown that the Chancellor is behind the curve. Even dovish talk from the Bank of England hasnt been enough to undermine the pound in recent days though that probably has more to do with the fact that out of the US dollar and the single currency, it is the best of a pretty bad bunch. Yesterdays move saw the pound break above its 200 day MA on its trade weighted index for the first time since mid May.

German July PPI +0.7% in July, up from 0.1%. Analysts expected the figure unchanged at 0.1%. On an annual basis, PPI +5.8%, following +5.6% in June. The idea of rising prices and weak growth is already been seen in the US , giving worries of stagflation and further complicating central banks' mandate. recent rate hike.

Canadian CPI for July is also expected to slip back on an annualised basis with expectations for a fall from 3.1% in June to 2.8%. The month on month decline that we saw in June of 0.7% is expected to be partly reversed for July with a rise of 0.2%. The current weakness in the Canadian dollar could well see it push back through parity against the US dollar and todays inflation figures could be the catalyst for that after managing to hold above the 200 day MA support at 0.9800.

Gold continues to make new highs against the US dollar as investors continue to fret about the risks of a double dip recession in the US and in Europe after disappointing economic data from both sides of the Atlantic combined with growth downgrades from a number of major banks.

Thursday's Premium trades included EURUSD, EURJPY, EURGBP, GBPUSD, GBPJPY, S&P500, silver, US crude To get a trial a click here:


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