Intraday Market Thoughts

Euro Still Capped Below 1.32 as ECB Purchases in Focus

by Patrik Urban
Apr 12, 2012 12:15

AUD labor market improved; UK trade deficit widened; Eurozone industrial production rose m/m but declined y/y; Italian auction. Market turns to PPI, trade deficit, jobless claims and Canadian trade data. See below for the latest on Tuesday’s Premium Trades.

The latest bounce in equities is being attributed to chatter of ECB returning to the markets, this time targeting Spanish bonds. The greenback is weaker against all majors in the ongoing session. European equities are losing about 0.7% and the relative strength winner is AUD.

FRBNY's Dudley reiterated Bernanke's take on the economy that more is needed on the policy front and that it is too early for any exit strategy.

AUD rose during the Asian session on labor market data that exceeded expectations. 44 thousand new jobs were created in March after a 15.4 thousand were lost in February. The unemployment rate remained steady at 5.2%. The AUD will undoubtedly be impacted by Chinese GDP that is due at 10:00 pm ET.

UK trade deficit widened in February to GBP -8.772 bln from GBP -7.5 bln as exports to non-EU countries fell 8.8% but imports grew 1%. Despite the poor result, GBPUSD trades higher around 1.5945.

Eurozone industrial production rose in February 0.5% from an unchanged reading a month earlier but declined to -1.8% from -1.7% y/y. Market sentiment towards the common currency cooled a bit as Greek unemployment ticked higher again in January as it printed 21.8% from previous 21.2%.

Italy nearly reached a full take up as it sold EUR 4.88 bln of BTPs out of EUR 5 bln target. However, the average yields rose and bid to cover declined.

The US session kicks off at 8:30 am ET with March PPI that is seen lower at 3.1% from 3.3% y/y (core PPI 2.8% from 3%). Trade deficit in February is expected to narrow slightly to USD -51.9 bln from USD -52.6 bln and jobless claims are anticipated at 355K from 357K.

Markets could also react at 9:00 am when FOMC member Dennis Lockhart participates at a panel discussion in Atlanta and at 3:30 pm when FOMC member Sarah Bloom Raskin delivers a speech on the state of economy.

Canadian trade data is due at 8:30 am ET and the surplus is expected to rise marginally to CAD 2.2 bln in February from previous CAD 2.1 bln.

Tuesday evening’s PREMIUM INTERMARKET INSIGHTS remain in progress ; EURUSD, AUDUSD, EURJPY, USDCAD, gold, silver and US crude (May contract), as well as EQUITY & FX VOLATILITIES vs SOVEREIGN YIELDS as well as the latest trades in Direct Access to these Premium Insights is found here: Non-subscribers, can go here:


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