Intraday Market Thoughts

Confusion on European Bailouts; RBNZ Holds, Aussie Jobs Next

by Adam Button
Dec 7, 2011 23:51

Rumors of IMF help in Europe helped the euro recover in USD trading. On the day, GBP and AUD were broad outperformers with the rest of the majors virtually unchanged. In early Asia-Pacific trading, the kiwi climbed after the RBNZ held rates. Aussie jobs are next. See Our AUDNZD Premium trade in the backdrop of those Aussie jobs.

Pre-ECB Premium Trades are below.

Journalists and market participants are scrambling to get the scoop ahead of the EU Summit on Friday leading to rumors, confusion and denial. The euro fell on reports Germany is not considering a parallel ESM and EFSF, countering earlier reports. The euro then rebounded on a report that the IMF is considering a $600B European lending program, but that was also denied. The day ended with EUR/USD just above 1.34.

The pound outperformed, hitting a one-month high against the euro despite soft domestic data. Flows appear to be a driver so stay on guard for a pullback.

RBNZ Holds

New Zealands central bank held rates at 2.50% as expected and said it will stay on hold for now, in a decision that was widely expected. At the same time, growth estimates for the next three years were lowered due to slowing in European and a modest downturn in Asia. The OIS market is pricing in a rate cut earlier next year but economists forecast no change. The market was on guard for more dovish decision and NZD/USD has climbed 30 pips since the decision.

Aussie Jobs Next

At 00:30 GMT, the focus shifts to Australia with November employment. The consensus is for 10.6K new jobs but no change in the 5.2% unemployment rate. AUD will be extremely sensitive to this data point, with a rise of 15K or more highly likely to push AUD/USD to 1.0350 and beyond.

Japan releases data on core machinery orders fell 6.9% m/m vs. expected decline of 0.5%.

Here are the latest Premium Trades ahead of Thursday's events, including new trades on USDJPY, EURUSD. EURJPY and US crude. Also watch AUDNZD ahead of this afternoon's RBNZ rate decision. DIRECT ACCESS here: Non-sunbscribers can click here:


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