Intraday Market Thoughts

UK Construction Firms, Focus Onto FOMC Minutes

by Patrik Urban
Apr 3, 2012 12:36

RBA left rates at 4.25% and hinted a rate cut; UK construction PMI solid; Eurozone PPI declined. Focus turns to factory orders and later to FOMC minutes. The latest Premium Intermarket Insights remain long EURUSD, with one trade in progress. Other positions include USDCAD, EURGBP, gold, silver and oil. 3 charts added on US ISMs vs UK, GERM, CHIN & Ezone Manuf PMIs, as well as Daily vs. Weekly EURUSD and latest on EURUSDs Golden Cross. More details below.

The greenback trades slightly stronger against most majors. European equities are losing about 0.3% and the relative strength loser is AUD.

The AUD has been under pressure since the beginning of the Asian session after the RBA hinted a rate cut. The cash rate remained unchanged at 4.25% but traders focused on the accompanying statement that said that the inflation outlook provides scope for easier policy and that growth is lower than thought. AUDUSD has dropped from 1.0463 to 1.0372.

UK construction PMI rose in March to solid 56.7 from February's 54.3. New orders rose at the fastest pace in more than four years and confidence continued to improve. As a consequence, the employment grew although a higher use of sub-contractors was noted. Despite the strong print, EURGBP continues to push higher and trades around 0.8335.

Eurozone PPI declined in February to 3.6% from 3.8% on annual basis reaching the lowest level since June 2010 (0.6% from 0.8% m/m). The decline occurred despite considerable rise of energy prices (2.2% m/m and 9.1% y/y).

The US session starts at 10:00 am ET with February factory orders that are expected to rise 1.5% from previous 1% decline.

The key event today is the minutes from the March 13th FOMC meeting that are due at 2:00 pm. The prospects for additional easing were gradually declining in light of improving data. However, dovish comments made by the FED chairman Bernanke last Monday implied that the possibility of more QE is still on the table. One of the possibilities is that the FED could extend the "operation twist" that is set to expire in three months.

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